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Morning Market Update - 26 April 2018

Pre-Open Data

Pre-open Data

Key Data for the Week

Key economic data released this week:

  • Thursday – US – Durable Goods Orders
  • Thursday – US – Crude Oil Inventories
  • Friday – US – Gross Domestic Product 
  • Friday – UK – Gross Domestic Product

Australian Market

Australian Market

The Australian sharemarket was closed yesterday due to the ANZAC Day public holiday. The local market closed 0.6% higher on Tuesday, led by gains among Consumer Discretionary stocks. All sectors closed higher, except for Materials.

The big four banks continued to boost the local market; ANZ gained 0.7%, Commonwealth Bank lifted 1.1%, NAB added 0.7% and Westpac put on 1.1%. However, AMP continued to slide, closing 2.6% lower, to be down close to 20% in April, following its hearing in the Royal Commission over the past week.

Boral Ltd (BLD) provided a trading update, expecting its Australia (inc Property) segment to deliver higher EBIT and EBITDA growth of 10-20% for FY18. However, the company did warn 3Q18 earnings in Australia were lower than expected, due to unscheduled kiln outage at Berrima, continued challenging conditions in WA and a rain impacted QLD market. However, a strong 4Q18 is expected to occur. North America earnings have been below expectations, due to poor weather conditions, operational issues and higher costs. BLD declined $0.65, to close 8.6% lower, at $6.88.

The Australian futures market points to a 0.1% rise today, being driven by stronger US markets overnight.

Overseas Market 

European sharemarkets fell on Wednesday, with investors focussed on rising global bond yields and the latest company earnings results. Uncertainty regarding the outlook for metal prices weighed on the basic Resources index. The broad based STOXX Europe 600 fell 0.8%, while the German DAX lost 1.0% and the UK FTSE 100 slipped 0.6%.

US sharemarkets ended mixed yet again, as investors continue to mull the implications of higher bond yields. Energy stocks were boosted by higher global oil prices, as the market continues to seek guidance as to whether the US will renew sanctions on Iran on May 12 regarding their nuclear agreement. Company earnings results were also in focus; Boeing rose 4.2%, after the company reported better than expected earnings from strong sales of commercial aircraft, while Twitter closed 2.4% lower, after the company flagged lower revenues and higher costs in coming quarters. By the close of trade, the Dow Jones ended 0.3% higher, the S&P 500 gained 0.2% and the NASDAQ added less than 0.1%.

CNIS Perspective 

Further support for the RBA to leave interest rates on hold for longer, came in the form of Tuesday’s inflation data.

Once again, data reveals inflation is nowhere near appearing on the radar, with the March quarter headline CPI coming in at 0.4%, to give an annual rate of 1.90%. This is the fourth consecutive quarter the CPI has been below the RBA’s targeted band of 2% - 3%.

While there are some upward pressures coming from utilities, education and health care, there are persistent headwinds from the spare capacity in the labour market, slow wages growth and growing retail price competition, that suggest price pressures will remain muted.

In this environment, the RBA is likely to remain on hold for some time.

Consumer Price Index

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Disclaimer

The material contained in this publication is in the nature of general comment only, and neither purports, nor is intended to be advice on any particular matter.  Persons should not act or rely upon any information contained in or implied by this publication without seeking appropriate professional advice which relates specifically to his/her particular circumstances.  Cutcher & Neale Investment Services Pty Limited expressly disclaim all and any liability to any person, whether a client of Cutcher & Neale Investment Services Pty Limited or not, who acts or fails to act as a consequence of reliance upon the whole or any part of this publication. Cutcher & Neale Investment Services Pty Limited ABN 38 107 536 783 is a Corporate Authorised Representative of Cutcher & Neale Financial Services Pty Ltd ABN 22 160 682 879 AFSL 433814

 

Topics: Investment, CNIS, ASX, S&P 500, US Economy, Earnings, US Sharemarket, Minerals

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