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Morning Market Update - 3 September 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 improved 0.5 in August to 50.4. This reading above 50.0 suggests manufacturing activity should expand in the period ahead.
  • Monday – UK – Markit Manufacturing PMI fell further into contraction, down to 47.4 in August from 48.0 in July, the weakest reading in seven years.
  • Tuesday – AUS – RBA Interest Rate Decision
  • Tuesday – US – Markit Manufacturing PMI

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket closed lower for the first time in five days, down 0.38% yesterday. The Telecommunications and Energy sectors were the weakest performers. Telstra slipped 2.2% after the company lowered FY20 total income guidance, citing slower than expected NBN activation numbers. Energy stocks weakened amid a sell-off in the price of oil; Oil Search fell 1.5%, Santos lowered 1.1% and Woodside Petroleum slipped 1.0%.

Materials outperformed the market, being the only sector to close higher. Mining heavyweights BHP and Rio Tinto rose 0.8% and 1.4% respectively. Western Areas climbed 14.1% to a one-year high, after its joint venture partner, St George Mining, said drilling had found "massive" nickel deposits at its Mt Alexander project in Western Australia.

The big four banks were mostly lower; ANZ, Commonwealth Bank and NAB all fell 0.1%, while Westpac closed flat.

The Australian futures market points to a 0.23% fall today.

Overseas Markets

European sharemarkets lifted on Monday. The Materials, Health Care and Financials sectors were amongst the strongest performers. Lloyds bank lifted 1.0% and Deutsche Bank added 1.1%. By the close of trade, the broad based STOXX Europe 600 rose 0.3% and the UK FTSE 100 rose 1.0%, as a fall in the British Pound sterling helped boost the internationally focused stocks. Italy's FTSE MIB gained 0.6% after Prime Minister Giuseppe Conte said on Sunday he expected to settle talks over a new government by Wednesday.

US share and bond markets were closed on Monday for the Labor Day holiday. However, US equity futures fell after reports US and China officials struggled to schedule a planned meeting this month to continue trade talks.

CNIS Perspective

This is a busy week for domestic economic data with some important numbers due to be released.

GDP growth for the June quarter is released tomorrow and is expected to show GDP for the quarter of 0.5% and an annual rate of 1.4%, which would be the weakest annual rate of growth since 2009.

Consumer spending remains soft and the construction sector is continuing to provide a drag on the economy.

Today’s retail sales data will also give an insight into the impact of the RBA’s two rate cuts, the tax rebate from the Federal Government and stabilising house prices.

Yesterday’s dwelling price data showed house prices may have bottomed, but whether these factors have flowed into consumer spending will be interesting to note in the GDP data. It appears unlikely.

Today the RBA is expected to leave rates on hold for the second consecutive month, unless they come to the realisation their previous forecasts were unrealistic and that monetary stimulus is needed sooner rather than later.

Should 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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