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Morning Market Update - 5 December 2018

Pre-Open Data

 International Market vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Tuesday – AUS – Current Account deficit narrowed from $12.1 billion in the June quarter, to $10.7 billion in the September quarter. The improvement reflected a widening of the surplus on the goods and services balance from $3.9 billion to $6.6 billion.
  • Tuesday – AUS – RBA Interest Rate Decision – The RBA left the cash rate on hold at 1.50%, as they have done since August 2016.
  • Wednesday – AUS – Gross Domestic Product
  • Wednesday – US – Federal Reserve Beige Book

S&P ASX 200 Last 12 Months

Australian Market 

The Australian sharemarket closed 1.0% lower yesterday, as all sectors ended the session weaker, except for Telecommunications, buoyed by Telstra, which closed up 1.0%. 

Energy stocks continued to come under selling pressure despite a 4% rise in global oil prices on Monday night. Woodside Petroleum slipped 1.3%, while Santos dropped 2.5%.

The big four banks all lost ground. Westpac fell 1.4%, ANZ gave up 1.3%, Commonwealth Bank slid 1.0% and NAB closed down 0.9%.

Materials heavyweights BHP and Rio Tinto lost 0.6% and 2.0% respectively, while Woolworths sunk 0.8% and Wesfarmers slumped 2.4%. 

ResMed Inc (RMD) has entered a definitive agreement to acquire Propeller Health for US$225m via an existing credit facility. Propeller Health is a digital therapeutics company providing connected health solutions for people living with chronic obstructive pulmonary disease and asthma. The transaction will have a dilutive impact of US$0.01-0.02 on FY19 underlying EPS. RMD declined $0.15, to close 1.0% lower, at $15.17. 

The Australian futures market points to a 1.33% fall today, being driven by broadly weaker international markets overnight.

Overseas Market 

European sharemarkets were weaker on Tuesday, as investors focussed on the difficulty for the US and China to achieve a broader trade agreement by the 90 day deadline. Brexit remained in focus, as the UK Government refused to release the legal advice underpinning the Brexit deal. The broad based STOXX Europe 600 fell 0.8%, the German DAX slid 1.1% and the UK FTSE 100 slipped 0.6%. 

US sharemarkets also closed lower on Tuesday, as doubts from investors over a trade deal being secured between the US and China weighed on the indices, along with uncertainty about the outlook for the US economy. The yield curve continued to flatten overnight, with the gap between long term and short term bond yields now at its smallest level in a decade. Banks, technology and industrials stocks led the losses. By the close of trade, the Dow Jones had given up 3.1%, the S&P 500 lost 3.2% and the NASDAQ slumped 3.8%.

CNIS Perspective 

Australia’s third quarter GDP is due to be released today and a respectable 3.3% annual growth rate is expected.

The run of data announced over the past few days suggests the weakness in consumer spending and the housing sector will be more than offset by government spending and net exports. 

Yesterday’s trade data showed an improved current account deficit, driven largely by a significant jump in the terms of trade. Higher commodity prices boosted export earnings in the quarter, while imports were relatively weak. 

The data again reflects the disjointed nature of the Australian economy, but also highlights how its diversity works to ensure an adequate growth rate is achieved overall.

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, ASX, Dow Jones, Australian Market, international markets

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