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Morning Market Update - 6 December 2017

 

Pre-Open Data

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Key Data for the Week

Key economic data released this week:

  • Tuesday – AUS – RBA Interest Rate Decision – The RBA left the cash rate unchanged at 1.50%.
  • Tuesday – EUR – Retail Sales were softer than expected, falling 1.1% in October. This follows an increase of 0.8% in September. For the year to October, retail sales rose 0.4%, down from an increase of 4.0% in the year to September.
  • Wednesday – AUS – Gross Domestic Product

Australian Market

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The Australian sharemarket closed lower yesterday, led by losses among Information Technology stocks, as only three sectors managed to end the session higher.

The Telecommunications sector was a standout performer for the second consecutive session, rising 2.6%, boosted by another strong performance by Telstra, which climbed 3.1%.

Despite the launch of Amazon’s new Australian website, a better than expected retail sales result for October, led Consumer Discretionary stocks higher, with retailers JB Hi-Fi and Harvey Norman closing up 6.8% and 6.2% respectively.

The Australian futures market points to a 0.54% fall today, following the lead of weaker overseas markets last night.

Overseas Market 

European sharemarkets fell on Tuesday, led lower by cyclical stocks. Dwindling enthusiasm over the US tax bill weighed on financial services providers, with US banks expected to benefit more than their European peers. The German DAX slipped 0.1%, while the broad based STOXX Europe 600 and UK FTSE 100 both slid 0.2%.

US sharemarkets also closed lower on Tuesday, as investors digested changes to the Senate's version of the US tax bill and assessed the impact of proposed tax cuts. Technology stocks recovered some of their losses from the two previous sessions, as Alphabet, Facebook and Microsoft each closed 0.8% higher. At the close of trade, the Dow Jones had lost 0.5%, while the S&P 500 and NASDAQ slipped 0.4% and 0.2% respectively.

CNIS Perspective

The RBA left the cash rate on hold yesterday, as widely expected.

It has been sixteen consecutive months since the RBA last touched the interest rate lever, and although they sounded relatively upbeat about the Australian economy, financial markets still believe they won’t touch the lever again for some time.

Markets are predicting the RBA will join other central banks in raising the benchmark interest rate late next year. If it does happen, it will be the first rate increase in Australia since October 2010.

Any talk of a future rise in rates will be largely determined by a lift in inflation, which the RBA are hoping will pick up as the economy strengthens, although they acknowledge wages growth remains low “and likely to continue for a while yet”. Wages growth is an important influence on the overall inflation outlook and “the outlook for household consumption is a continuing source of uncertainty”.

GDP is announced today, and will provide us some comfort as to whether the RBA is on the right track or not.

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Contact Us

Should you wish to discuss this or any other Investment related matter, please contact our 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: Investment, CNIS, RBA, GDP

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