Morning Market Update - 28 November 2019

Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

    • Wednesday – AUS – Construction Work Done fell 0.4% in Q3, to be 7% lower over the year. A rebound in public works helped offset a drop in private construction activity.
    • Wednesday – US – Gross Domestic Product rose 2.1% in the September quarter, above expectations for a 1.9% rise.
    • Thursday – EUR – Consumer Confidence
    • Thursday – EUR – Industrial Production

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket extended its winning streak to four straight sessions, as the index rose 0.9% yesterday, with all sectors closing higher. The Telecommunications sector saw the largest gains, with Telstra up 2.8%, after the company reaffirmed its FY20 guidance at an investor day.

The big four banks closed mostly higher; Commonwealth Bank led the gains, up 1.2%, ANZ lifted 0.5% and NAB eked out a 0.1% gain, while Westpac declined 0.2%.

Woolworths rose 1.3% following news chief executive Brad Banducci turned down a potential $2.6 million bonus after the supermarket giant underpaid 5,700 staff for years.

The Materials sector also had strong gains. Mining heavyweights BHP and Rio Tinto added 1.2% and 1.1% respectively, while gold miners St Barbara and Saracen Mineral jumped 4.4% and 3.0% respectively.

The Australian futures market points to a 0.26% rise today, being driven by stronger overseas markets.

Overseas Markets

European sharemarkets rose on Wednesday, with the broad based STOXX Europe 600 up 0.3%. Bank stocks saw gains; Lloyds Banking Group added 0.8%, while Deutsche Bank and ING Groep lifted 1.1% and 1.2% respectively.

US sharemarkets were also higher overnight. Information Technology stocks were amongst the best performers; Facebook added 1.5%, Apple rose 1.3% and Microsoft gained 0.2%. Financial services companies also saw strong gains; PayPal lifted 1.5%, Square and Visa both added 1.0% and MasterCard rose 0.8%.  Alibaba shares rose 3.1% to extend this week’s gains. The company was recently listed on the Hong Kong stock exchange, which saw the stock rise over 6% on its opening day.

By the close of trade, the Dow Jones and S&P 500 both added 0.4%, while the NASDAQ lifted 1.3%.

CNIS Perspective

Construction figures released yesterday by the Australian Bureau of Statistics unfortunately provide yet more indication of weakness in the economy over the past year.

Residential building fell 3.1% in the September quarter, marking its fifth straight decline. Over the year, residential building is down 10.6%, the biggest annual fall in 18 years.

While residential building continues to decline, this is not a major surprise, given a major rebalancing of supply and demand was to be expected, following the housing construction boom between 2012 and 2017.

As the construction industry is Australia’s third largest employer, with almost 1.2 million workers, or 9.1% of the total workforce, any prolonged deterioration in the sector will no doubt have ramifications throughout the economy, especially the labour market.

However, with a recent rebound in Sydney and Melbourne home prices and record low borrowing rates, hopefully a bottoming out in the construction sector is not that far away.

Home building is falling

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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