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Morning Market Update - 26 November 2019


Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

    • Monday – US – Chicago Fed National Activity Index deteriorated in October to -0.71, from -0.45 in September.
    • Tuesday – US – Housing Price Index
    • Tuesday – US – New Home Sales

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket closed 0.3% higher yesterday, led by gains in the Energy and Telecommunications sectors, as Telstra ended the session 2.0% higher. However, gains were capped by the Financials sector, which was weighed down by the big four banks, with Westpac again the worst performer, closing 1.3% lower.

Caltex (CTX) rose 7.0%, after the petrol giant announced it will offload half of the company’s stake in 250 service stations around Australia into a newly created listed property trust. The IPO, planned for the first half of 2020, will include a 49% stake in those fuel and service stations, with CTX to retain a majority 51% interest in the sites. CTX currently owns a network of 500 petrol stations nationally.

Materials stocks were led higher by the major iron ore miners; BHP and Fortescue Metals both gained 1.8% and Rio Tinto climbed 2.0%. However, gains didn’t extend to the goldminers, as Newcrest, Evolution Mining and Northern Star all fell 1.3% – 1.6%.

The Australian futures market points to a 0.4% rise today, being driven by broadly stronger markets overnight.

Overseas Markets

European sharemarkets rose for a second straight session on Monday. Louis Vuitton owner, LVMH, rose 2% as the French luxury goods group agreed to buy US jeweller, Tiffany & Co, for US$16.2 billion. Novartis rose 1.2% after announcing a US$9.7 billion takeover of US firm, The Medicines Company, a maker of cholesterol drugs.

US sharemarkets rose to record highs on Monday, with merger and acquisition activity, as well as signs of progress on a US-China trade agreement, boosting investor sentiment. China announced it will raise penalties on violations of intellectual property rights to address one of the main sticking points in trade talks between the nations. By the close of trade, the Dow Jones gained 0.7%, the S&P 500 added 0.8% and the NASDAQ strengthened 1.3%.

CNIS Perspective

Protests in Hong Kong have weighed heavily on market sentiment since they turned violent at the start of July.

The protests have pushed the Hong Kong’s economy into a technical recession, adding to pain from the US-China trade war. However, Sunday’s Hong Kong elections have boosted hopes that violent protests may begin to subside.

The pro-democracy camp won 17 out of 18 district councils, all of which had previously been under pro-establishment control, as voters slammed the Chinese handling of violent protests. Pro-establishment councillors held 292 seats heading into the election and are now left with just 59!

The polls on Sunday saw record voter participation of 71.2%, smashing the previous record of 58% in the 2016 Legislative Council elections.

Hong Kong’s property and retail stocks have been most effected since the protests began, as tourists have avoided the city, and Hong Kong’s significance as an economic hub was brought into question.

While stand-offs between protesters and police continue, and a resolution to the violence is no certainty, it’s a step in the right direction for the Hong Kong economy to begin a recovery.

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


Disclaimer

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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