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Morning Market Update - 6 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 fell from 52.2 in June to 43.9 in July, falling back into contraction territory after two consecutive months above 50.
  • Monday – US – Markit Services PMI lifted from 50.2 in June to 51.4 in July, highlighting an increase in activity in the month.
  • Tuesday – AUS – RBA Interest Rate Decision
  • Tuesday – AUS – Trade Balance
S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket fell 1.9% yesterday, with all sectors closing lower. The Information Technology sector was the weakest performer, falling 5.2%.

Mining heavyweights BHP and Rio Tinto fell 3.6% and 3.5% respectively, weighing on the Materials sector. Energy stocks were mixed; Woodside Petroleum lost 1.8% and Santos slipped 2.4%, while Oil Search rose 2.9%, after the PNG Government agreed in principle to support the Papua LNG Gas agreement.

The Financials sector was dragged lower by the big four banks; Commonwealth Bank fell 0.8%, Westpac and NAB lost 1.2% and 1.3% respectively, while ANZ was the weakest performer, down 1.7%.

Wesfarmers outperformed, up 0.8%, after the Australian Competition & Consumer Commission approved its $230 million acquisition of online retailer Catch Group.

The Australian futures market points to a 1.7% fall today, being driven by weaker overseas markets.

Overseas Markets

European sharemarkets fell on Monday, with new developments in the US-China trade war weighing on the market. Mining, technology and luxury good stocks were the hardest hit. By the close of trade, the broad based STOXX Europe 600 fell 2.3%, France’s CAC 40 slipped 2.2% and the Italian FTSE MIB lost 1.3%.

US sharemarkets also closed lower overnight. China's Commerce Ministry said Chinese companies have stopped buying US agricultural products. China also allowed its currency to depreciate, a move called a "major violation" and "currency manipulation" by US President Trump. A weaker yuan serves to make Chinese goods more competitive on the global stage.

Technology stocks were the hardest hit; Apple fell 5.2%, Micron Technology slipped 4.9%, Facebook lowered 3.9%, Intel gave up 3.5% and Microsoft lost 3.4%.

CNIS Perspective

Australian dwelling prices have recorded their best result since August 2011.

This confirms the two rate cuts from the RBA and clarity over housing tax policies after the Federal election have translated into a turnaround in sentiment within the housing market.

Prices in Sydney and Melbourne have increased for consecutive months, providing a clearer indication that prices have bottomed out in these two crucial property market cities.

Whether a return to the strong price growth over 2012 to 2017 is repeated is doubtful, considering slow income growth and high household debt levels will likely keep a lid on any sharp turnaround.

However, this is positive news for a sector that has been facing a few challenges of late and it will be interesting to see how the market performs in the spring selling season.

CoreLogic Hedonic Home Value

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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