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Morning Market Update - 7 December 2017

 

Pre-Open Data

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Key Data for the Week

Key economic data released this week:

  • Wednesday – AUS – Gross Domestic Product grew 0.6% for the quarter ending 30 September and 2.8% over the prior 12 months.
  • Thursday – EUR – Gross Domestic Product
  • Thursday – US – Initial Jobless Claims

Australian Market

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The ASX 200 declined 0.4% yesterday, making it three consecutive days in the red. Materials and Energy names led the losses; BHP fell 1.98% and Origin Energy gave up 2.30%.

Consumer names extended their recent rally, shrugging off relatively soft data yesterday. Woolworths and Wesfarmers closed up 0.11% and 0.21% respectively, whilst fresh fruit and vegetable grower Costa Group also finished 1.5% higher.

Amongst the banks; ANZ lifted 0.68%, Westpac rallied 0.45%, NAB put on 0.34% and Commonwealth Bank rose 0.18%.

At its AGM yesterday, TPG Telecom Ltd (TPM) reaffirmed its FY18 EBITDA guidance of $800-815m and stated some initial trial sites for its planned mobile network are already in the process of being installed in Sydney and Melbourne. TPM gained $0.08, to close 1.3% higher, at $6.11.

The Australian futures market points to a 0.33% rise today.

Overseas Market 

US equities were little changed on Wednesday night. The Dow Jones and S&P 500 lost 0.08% and 0.01% respectively, whilst the NASDAQ rallied 0.21%.

Nestlé announced the acquisition of Atrium Innovations, a world-wide leader in nutritional supplements and one of the fastest growing companies in the industry globally, for US$2.3bn in cash. Nestlé rallied 1.24% overnight.

In Europe, markets were mixed. The UK’s FTSE 100 rallied 0.28%, whilst the German DAX and France’s CAC 40 lost 0.38% and 0.02% respectively.

CNIS Perspective

Australia’s GDP figure announced yesterday confirmed our assessment of the Australian economy: the consumer is not spending, government infrastructure spending is kicking in and the weaker dollar is also helping.

We have previously noted the concern the RBA has over the uncertainty that household spending will have on economic growth. Their fears were confirmed in yesterday’s GDP, where household consumption rose only 0.1% in the September quarter, which is the weakest pace of growth in almost nine years.

This is important considering consumer spending accounts for almost two thirds of GDP.

Weak wages growth, rising household debt and higher mortgage rates have combined to slow household spending. The household saving ratio rose, indicating households chose to save more.

The enormous level of government infrastructure spending is spilling over into the private sector, which is also being helped by improved global economic conditions and the weaker AUD.

Nothing new was revealed yesterday. The economy is hardly cruising along, but not spluttering to a standstill either.

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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, Consumer, GDP, Households

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