Morning Market Update - 26 March 2020

Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Wednesday – UK – Consumer Price Index rose 0.4% in February and 1.7% on an annual basis.
  • Wednesday – US – Durable Goods Orders rose 1.2% in February.
  • Thursday – UK – Retail Sales
  • Thursday – US – Initial Jobless Claims

    S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket rose 5.5% yesterday, the first back to back days of gains since the coronavirus crisis began. All sectors closed higher, except for Health Care, which slipped 0.2%.

The Financials sector was the strongest performer, led by gains from the big four banks; ANZ rallied 11.6%, NAB climbed 9.7%, Commonwealth Bank added 9.5% and Westpac rose 9.2%.

Mining heavyweights benefitted from a pickup in iron ore prices; BHP rose 10.2%, while Rio Tinto and Fortescue Metals both added 5.4%.

Qantas gained 26.3% after securing $1.05 billion in additional debt against its aircraft fleet, to give the company added liquidity.

Wesfarmers rose 5.5% after it announced it will shut its 25 Kmart outlets in New Zealand, but will keep Bunnings open, while its Australian stores will also remain open.

The Australian futures market points to a 2.02% rise today, driven by stronger international markets.

Overseas Markets

European sharemarkets rose overnight, as investors anticipate further stimulus measures will be taken to dull the economic impact from the coronavirus outbreak. The broad based STOXX Europe 600 rose 3.1%.

US sharemarkets were mostly higher overnight, led by the Industrials, REITs and Energy sectors, while the Communication Services and Information Technology sectors were the underperformers.

CNIS Perspective

The US government’s bailout and economic condition is attracting the most media attention at the moment, with Europe avoiding the same level of scrutiny.

However, given the fragility of Europe’s economy it should probably be given equal, if not more, attention than the stronger US.

The US government is expected to pass legislation that is intended to bail out their economy, and while the dollars being thrown at it are enormous, it’s more than likely the strength of the US economy can ultimately justify it.

Europe on the other hand, doesn’t possess the economic engine the US does and its largest member, Germany, is showing signs of a slump.

German business confidence has collapsed the most in three decades and the 19-nation euro area is sliding into its worst recession in history.

Once again, it looks like Germany will have to bailout the weaker members, like it did Greece in 2012.

Chancellor Merkel has set up a €550 billion public guarantee program to keep companies afloat and signed off on an emergency budget that includes another €750 billion.

Whether the German economy has the capacity to fund the bailout is another issue given business confidence has plummeted.

What this means for the future of the Eurozone must start to become a concern.

The UK may well be cheering about their Brexit decision to leave.

German Business Slump

Should you wish to discuss this or any other investment related matter, please contact your Investment Services Team on (02) 4928 8500.


The material contained in this publication is the nature of the general comment only, and neither purports, nor is intended to be advice on any particular matter. Persons should not act nor 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: CNIS, Australian Market, ASX, international markets

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