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Morning Market Update - 5 February 2019

Pre-Open Data

International markets vs australian market

Key Data for the Week

Key economic data released this week:

  • Monday – AUS – Building Approvals dropped 8.4% in December, against expectations for a small rebound following a 9.8% fall in November.
  • Monday – US – Durable Goods Orders were weaker than expected in November, down 0.6%, below expectations for a 0.2% rise.
  • Tuesday – AUS – Retail Sales 
  • Tuesday – AUS – RBA Cash Rate Decision

ASX 200 last 12 months

Australian Market

The Australian sharemarket rose 0.5% yesterday, led by the Utilities and Energy sectors, up 1.6% and 1.3% respectively. The Financials sector was also stronger, gaining 1.0%, as the big four banks closed between 0.7% and 1.2% higher.

Boral (BLD) was weaker after its 1H19 guidance underwhelmed amid adverse Australian weather, construction delays, and slowing volumes in the US. BLD closed down 7.9%.

Healthscope (HSO) provided its 1H19 trading update and reaffirmed its FY19 guidance for Hospitals Operating EBITDA to grow over 10%. The update revealed 1H19 Hospitals Revenue was $1.1bn and Hospitals EBITDA was $186m. HSO closed at $2.46.

The Australian futures market points to a 0.61% rise today, being driven by stronger overseas markets.

Overseas Market

European sharemarkets were mixed on Monday, with banks the biggest drag. The broad based STOXX Europe 600 rose 0.1%, the UK FTSE 100 gained 0.2% and the German DAX was flat.

US sharemarkets rose overnight.  The Dow Jones and S&P 500 both rose 0.7% and the NASDAQ climbed 1.2%. Gilead Sciences (GILD) reported Q4 earnings, with total revenue of US$5.8bn down from US$5.9bn for the previous corresponding quarter. GILD announced an increase in their quarterly dividend up 10.5% to US$0.63. GILD closed flat for the session at US$70.05.

Technology companies were strong performers; Alphabet was up 2.0%, Facebook rose 2.1%, Apple gained 2.8%, Microsoft lifted 2.9% and Netflix climbed 3.4%.

CNIS Perspective 

A picture paints a thousand words and the graph below does exactly that for Australia’s residential building activity.

The drop in building approvals of 8.4% in December, followed a 9.8% fall in November. Over the 2018 calendar year, the total decline was 22.5%, down over 39% from the peak of November 2017.

The weakness was broad based across all sectors, however private sector “other” dwelling approvals, which are mostly apartments, dropped almost 19% to the lowest number since 2012.

Residential building activity has been a key driver of Australia’s post GFC/Mining boom economy, and helped cushion unemployment during this period.

A wide range of skills are engaged in the residential construction industry and these latest leading indicators suggest significant downside risks to the job market, on top of being a general drag on the domestic economy.

Building approvals in thousands 10 year average

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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