Morning Market Update - 3 December 2019

Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

    • Monday – CHINA – Caixin Manufacturing PMI rose to 51.8 in November from 51.7 in October, its highest reading since 2017.
    • Monday – EUR – Markit Manufacturing PMI increased slightly to 46.9 from 46.6 previously. The survey remains in contractionary territory, led by weakness in the German manufacturing sector.
    • Monday – US – ISM Manufacturing PMI fell slightly to 48.1 in November, registering its fourth consecutive month below the neutral level (50).
    • Tuesday – AUS – RBA Interest Rate Decision

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket ended the session 0.2% higher yesterday, led by gains in the Utilities sector. Health Care stocks were another stand out, boosted by CSL, which gained 0.9% to close at a new all-time high. CSL has now gained 54.5% since the beginning of the year.

The big four banks all posted gains, with Commonwealth Bank the best performer, closing up 0.8%, while diversified mining heavyweights, BHP and Rio Tinto, rose 0.2% and 0.6% respectively. Iron ore miner, Fortescue Metals, strengthened 3.0%, buoyed by better than expected Chinese manufacturing data.

Energy stocks were among the weakest performers, following a 5% slump in global oil prices over the weekend. In response, Santos slipped 0.6%, Woodside Petroleum slid 0.8% and Oil Search lost 1.9%.

The Australian futures market points to a 1.33% fall today, driven by weaker overseas markets overnight.

Overseas Markets

European sharemarkets fell on Monday, as US President Donald Trump announced he would immediately restore tariffs on US steel and aluminium imports from Brazil and Argentina, accusing them of devaluing their currencies to the detriment of US farmers. China also called for a rollback of US tariffs before it would agree to a trade deal. France’s CAC 40 and Germany’s DAX both lost over 2.0%, while the broad based STOXX Europe 600 fell 1.6%.

US sharemarkets also dropped overnight, as weaker US manufacturing and construction data, along with increased trade concerns, weighed on sentiment. Retail stocks closed lower, despite expectations of record Cyber Monday sales of US$9.4 billion. By the close of trade, the S&P 500 fell 0.9%, the Dow Jones slid 1.0% and the NASDAQ lost 1.1%.

CNIS Perspective

Oil production has been one of the most significant factors behind the US economic recovery post-GFC, and it’s now official that the US is a net exporter of oil.

During September, the US exported 89,000 more barrels of crude oil and refined petroleum products than it imported, which marks the first full month of positive oil trade since the 1940s.

Increasing production from shale oilfields, the end of a crude export ban in 2015 and reduced petrol demand due to fuel economy improvements in motor vehicles, have all contributed to the turnaround.

In 2018, the US had a trade deficit in petroleum of US$62 billion, or 10% of the country’s trade balance.

That deficit will now be a surplus of hundreds of billions of US Dollars and is a game changer as far as the US economy is concerned.

Trade balance in crude oil and petroleum products, million b/d

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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