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Morning Market Update - 4 October 2019


Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Thursday – AUS – Trade Balance recorded a $5.9bn trade surplus in August, down from the $7.3bn surplus registered in July.
  • Thursday – US – Durable Goods Orders rose 0.2% in August, in line with expectations.
  • Friday – AUS – Retail Sales

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket fell 2.2% yesterday, with losses across the board. The Energy sector was impacted by a fall in oil prices, with fears of oversupply; Santos fell 4.1%, Woodside Petroleum lost 3.1% and Oil Search slipped 2.2%.

The Materials sector extended recent heavy declines; Rio Tinto fell 4.2%, while BHP and Fortescue Metals both lost 3.2%. However, a lift in the price of gold helped boost local miners; Saracen climbed 4.1%, Northern Star rose 3.5% and Newcrest Mining added 2.8%.

The Financials sector was impacted by the big four banks; NAB lead the declines, down 3.5%, Commonwealth Bank and ANZ slipped 2.8% and 2.7% respectively, while Westpac lost 2.4%.

The Consumer Discretionary sector was part of the broader sell-off; Harvey Norman fell 2.6%, Myer slipped 2.4%, Coles lost 2.0% and JB Hi-Fi edged down 0.7%.

The Australian futures market points to a 0.54% rise today.

Overseas Markets

European sharemarkets were mixed on Thursday, with trade uncertainty around US tariffs on European goods. Despite this, Airbus rose 4.3% and spirits maker Remy Cointreau climbed 6.4%. By the close of trade, the broad based STOXX Europe 600 ended flat.

US sharemarkets rose overnight, as trader looked for value in the market. The Information Technology sector was the best performer; Facebook added 2.7%, Microsoft rose 1.3% and Alphabet gained 1.0%. By the close of trade, the Dow Jones added 0.5%, the S&P 500 gained 0.8% and the NASDAQ lifted 1.1%.

CNIS Perspective

The US earnings season, which is about to get under way, will be one of the most closely monitored for some time.

During the past week, concerns heightened about a significant slowdown in the US economy and this has obviously flowed through to the ASX 200, which fell 2.2% yesterday.

On Wednesday we mentioned the release of the US ISM data, which showed a significant drop in manufacturing to a 10 year low. This was the second month in a row it has fallen, and the importance of this data wasn’t lost on the S&P 500, which is now down 2.2% since the data release.

The risk being the weakness in the manufacturing sector flows into other sectors, notably the consumer, which would be a major problem.

All eyes will be on the US non-farm payroll data due to be released tonight.

The market appears to be looking for signs of weakness, and if it finds it, there could be more downside to the market.

S&P 500 Index

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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