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Morning Market Update - 4 December 2019


Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

    • Tuesday – AUS – RBA Interest Rate Decision – The RBA left the cash rate unchanged at 0.75%, after last cutting the cash rate in October.
    • Wednesday – AUS – Gross Domestic Product
    • Wednesday – US – Markit Services PMI

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket suffered its worst day since mid-August, on renewed fears over global trade uncertainty. The local market fell 2.2%, with all sectors over 1% lower. 

Consumer Staples was the worst performing sector. Giants Woolworths and Wesfarmers fell 3.4% and 2.6% respectively.

The Financials suffered heavy losses as the big four banks came under pressure; Commonwealth Bank led the declines, down 2.6%, NAB fell 1.8%, while Westpac and ANZ slipped 1.3% and 1.1% respectively.

Mining heavyweights BHP and Rio Tinto fell 1.4% and 0.5% respectively, while Fortescue Metals slipped 1.5%. Goldminers were mixed; Evolution Mining rose 1.5%, while Saracen Mineral and St Barbara fell 1.3% and 1.2% respectively.

Ramsay Health Care gave up 3.3% and CSL lost 2.9% to drag the Health Care sector lower.

The Australian futures market points to a 0.75% fall today, driven by weaker overseas markets.

Overseas Markets

European sharemarkets were generally lower on Tuesday. The broad based STOXX Europe 600 fell 0.6%, the UK FTSE 100 lost 1.8%, while Germany’s DAX rose 0.2%. LVMH Moet Hennessy Louis Vuitton SE fell 1.5%, after the US threatened duties of up to 100% on French goods including champagne, cheese and handbags.

US sharemarkets also closed lower overnight, as trade concerns weighed on investor sentiment. President Trump stated he does not have a deadline on the US-China trade deal, and it might be better to wait until after the November 2020 election. The Energy and Financial sectors were the worst performers. Goldman Sachs and Morgan Stanley fell 2.5% and 2.0% respectively, while Bank of America and JPMorgan lost 1.8% and 1.3% respectively.

By the close of trade, the Dow Jones fell 1.0%, the S&P 500 lost 0.7% and the NASDAQ slipped 0.6%.

CNIS Perspective

Australia’s global trade has once again come to the party to not only support the domestic economy, but to break a 46 year record at the same time.

Trade figures for the September quarter drove the current account into surplus for the second consecutive quarter. It’s the first back to back account surplus in nearly 46 years, after the June quarter recorded the first quarterly surplus since 1975.

The result was driven by strong export receipts and weaker domestic demand for imports.

Iron ore prices peaked in July at just under US$120 per tonne, before subsequently falling to around US$90 per tonne for the rest of the quarter on the back of supply disruptions caused by natural disasters, coupled with stimulus measures from China.

Australia’s September quarter GDP is due to be released today, and given this trade data, it’s highly likely we will see a jump in the quarterly GDP to 0.6%, from the lacklustre 0.5% in the June quarter.

Terms of Trade

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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