Morning Market Update - 31 October 2019

Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

    • Wednesday – AUS – Consumer Price Index rose 0.5% in the September quarter, taking the annual rate to 1.7%.
    • Wednesday – US – Gross Domestic Product rose 1.9% in the September quarter, above expectations for a 1.6% rise. Growth was supported by strong consumer spending, which increased 2.9%.
    • Thursday – EUR – Consumer Price Index
    • Thursday – EUR – Gross Domestic Product

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket fell 0.8% yesterday, to snap seven sessions of gains, with all sectors closing lower. The Telecommunications, Consumer Staples and Information Technology sectors led the declines.

Woolworths dropped 1.4%, despite announcing a record 6.6% lift in same-store sales between July and September. News the supermarket giant underpaid 5,700 staff as much as $300 million over the past nine years weighed on investor sentiment.

Costa Group plunged 24% after they resumed trading following a six-day freeze. The company completed an institutional entitlement offer, with 88% take-up, which raised $87 million at a discounted price to strengthen its balance sheet. The company warned unfavorable weather conditions are impacting fruit output, leading it to reduce CY19 guidance.

The Financials sector was impacted by falls to the big four banks. ANZ and Commonwealth Bank both fell 1.0%, while NAB and Westpac both slipped 0.6%. Financial technology company Zip, fell 12.2%, despite the announcement of record quarterly revenue. The company reported margins had shrunk in the September quarter as it spends more on growth initiatives.

The Australian futures market points to a 0.09% rise today.

Overseas Markets

European sharemarkets were mixed on Wednesday, with the broad based STOXX Europe 600 adding 0.1%. Cosmetics company L'Oréal, rose 7.6%, after the company reported better quarterly revenue than forecast. Fiat Chrysler jumped 9.5%, after it confirmed it was in merger talks with French rival Peugeot, whose stock added 4.5%.

The US sharemarket rose overnight, with the Utilities and Health Care sectors leading the gains. Johnson & Johnson added 2.9%, after FDA test results found no asbestos in their baby powder. Financial services companies Visa and MasterCard rose 0.9% and 1.0% respectively, while PayPal lifted 1.4%. Microsoft added 1.3%, Apple and Google both closed flat, while Facebook fell 0.6%. By the close of trade, the Dow Jones rose 0.4%, while the S&P 500 and the NASDAQ both added 0.3%.

CNIS Perspective

As anticipated, the US Federal Reserve lowered the official interest rate target overnight, from 1.75-2% to 1.5-1.75%. This is the third rate cut in the US for 2019 (all since July) and the Fed has signalled it is done for now, much to Trump’s chagrin.

The US stockmarket, which was trading during the rate cut announcement, reacted positively, yet somewhat subdued, with the S&P 500 ending the day 0.33% higher.

Looking past the headline rate cut, the Fed released minutes from their two day meeting which provided insight as to what future policy holds, resulting in the interest rate futures market pricing for one more cut next year.

With more clarity on US monetary policy for the near future provided, sharemarket attention now turns to the US-China trade negotiations for hope of further positive news.      

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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