Morning Market Update - 5 August 2019

Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Monday – AUS – AIG Services Index
  • Monday – US – Markit Services PMI
  • Tuesday – AUS – RBA Interest Rate Decision
  • Tuesday – AUS – Trade Balance
  • Wednesday – AUS – Housing Finance
  • Wednesday – US – Consumer Credit
  • Thursday – CHINA – Trade Balance
  • Friday – AUS – RBA Statement on Monetary Policy
  • Friday – UK – Gross Domestic Product
S&P ASX 200 Last 12 Months

Australian Market

The benchmark ASX 200 index closed down 0.3% on Friday. The Energy sector was the worst performer, down 2.5%, with Beach Energy falling 5.2% and Woodside and Santos down 2.3%.

The big four banks were mixed; ANZ lost 0.8%, NAB dropped 0.5% and Commonwealth Bank gave up 0.1%, while Westpac rose 0.1%.

GrainCorp fell 5.4% after the bulk grains handler flagged a loss of up to $90 million thanks to continued drought and "significant" global grain market disruptions.

Bega Cheese also cut its earnings guidance on drought issues, saying the exit of many farmers from the dairy market had led to unprecedented competitive pressures. Bega shares fell 4.3% for the session.

The Australian futures market points to a flat open today. 

Overseas Markets

European markets fell on Friday night, following an announcement of 10% tariffs on China’s remaining US$300 billion of exports to the United States. France’s CAC 40 dropped 3.57%, Germany’s DAX lost 3.11% and the UK’s FTSE 100 fell 2.34% for the session.

US markets also closed lower on Friday night; the Dow Jones lost 0.37%, while the S&P 500 and NASDAQ fell 0.73% and 1.32% respectively.

First Solar released their earnings results after the market closed on Thursday night, reporting sales of US$585 million, up 10% from the previous quarter, primarily due to increased module and system sales in the US and Australia. The Company reported a second quarter loss per share of US$0.18, compared to a loss per share of US$0.64 in the first quarter of 2019. First Solar closed 0.30% lower.

Real Estate Investment Trust Macerich also released their quarterly results, with average rent per square foot increasing to US$61.17 at 30 June 2019, up 4.0% from US$58.84 at 30 June 2018. Macerich also reported mall tenant annual sales per square foot for the portfolio increased by 12.1% to US$776 for the twelve months ended 30 June 2019. Macerich added 0.34% for the session.

CNIS Perspective

It may not technically be correct, but Woolworths, the South African owners of David Jones, believe Australia’s retail sector is in recession.

They have had to write down the value of their investment in David Jones twice in the past 12 months, with its value now $965 million, less than half the $2.1 billion they paid for it in 2014.

The blame for the underperformance is aimed directly at the Australian economy. From the second half of last year, they claim it hit a soft patch pressured by a slide in property values, stagnant wages growth and weak consumer spending, all of which were against a backdrop of weaker global demand.

Given retail sales ticked upwards by 0.4% in June after a couple of months of consecutive declines, it doesn’t satisfy the definition of a “retail recession”, but given this has been an appalling investment for the South Africans over the past five years, you can understand they are extremely critical of the Australian economy, which they claim has “slowed to its weakest level since the GFC in 2009”.

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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