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Morning Market Update - 30 January 2019

Pre-Open Data

 International Market vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Tuesday – AUS – NAB’s Business Conditions & Confidence – Business Conditions dropped sharply, from 10.6 in November, to 2.2 in December. Confidence also weakened from 3.4 in November, to 2.8 in December, the lowest since January 2016.
  • Tuesday – US – Consumer Confidence fell from 126.6 in December, to 120.2 in January, its lowest level since July 2017, as the US Government shutdown weighed on sentiment.
  • Wednesday – AUS – Consumer Price Index
  • Wednesday – US – Federal Reserve Interest Rate Decision
  • Wednesday – US – Gross Domestic Product

S&P ASX 200 Last 12 Months

Australian Market 

The Australian sharemarket closed 0.5% lower yesterday, led by losses in the Financials and Health Care sectors. Resmed continued its recent decline, following the release of their December quarterly results, closing down 10.4%, while CSL gave up 2.3%.

Telecommunications stocks were the standout performers, buoyed by Telstra, which ended the session 7.8% higher, following TPG’s decision to cancel its plans to build a 5G mobile network. TPG closed up 3.0%. 

Materials heavyweights BHP and Rio Tinto both had strong sessions, rising 2.1% and 3.8% respectively, however lower oil prices weighed on Energy stocks, with Santos closing down 1.1%. 

The Australian futures market points to a 0.39% rise today, driven by stronger European markets overnight.

Overseas Market 

European sharemarkets were firmer on Tuesday, ahead of key events this week such as the US interest rate decision and US-China trade talks. The broad based STOXX Europe 600 rose 0.8%, the UK FTSE 100 lifted 1.3% and the German DAX eked out a 0.1% gain. 

US sharemarkets closed mostly lower on Tuesday, despite earnings results being generally positive. Investors continue to wait for key earnings releases from technology giants such as Alibaba, Amazon, Apple, Facebook and Microsoft this week. By the close of trade, the S&P 500 had given up 0.2% and the NASDAQ slid 0.8%, however, the Dow Jones climbed 0.2%.

CNIS Perspective 

Fear that China’s slowing economy and fallout from the trade war will domino into significantly weaker GDP in the US are probably overdone. 

There’s no doubt China’s slowdown will see a deceleration in world growth, but the US economy and businesses are still growing, thanks to healthy consumer spending, which is still the biggest driver of GDP.

Bank lending to consumers in the US, as reported by JP Morgan and Bank of America, has grown and more importantly, the credit quality of their consumers continues to improve, as reflected in falling write-off provisions. 

With unemployment at a record low and job hiring continuing, it seems the US consumer will continue to drive US GDP.

The same is probably not the case in Australia, where lending has contracted and unemployment is holding steady. However, the other major input into GDP is government spending, and that should keep Australia’s GDP positive for a bit longer.

US retail sales

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 in the nature of general comment only, and neither purports, nor is intended to be advice on any particular matter.  Persons should not act or 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, Dow Jones, Australian Market, ASX, international markets

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