Morning Market Update - 8 February 2019

Pre-Open Data

International Market vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Thursday – UK – Bank of England Cash Rate remained unchanged at 0.75% as widely expected.
  • Thursday – AUS – NAB Business Confidence fell from 3 in the September quarter, to 1 in the December quarter.
  • Friday – AUS – RBA Statement on Monetary Policy
  • Friday – US – Consumer Credit

S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket rose to fresh four month highs up 1.1% yesterday, as all sectors gained, with the exception of Utilities. 

The Financials sector led the gains, with the big four banks all rising over 1%, Commonwealth Bank led the pack up 2%. NAB was placed in a trading halt due to leadership changes following the Royal Commission, which later saw Chairman Ken Henry and Chief Executive Andrew Thorburn both resign.

AGL Energy fell 4.8% after the company decided not to recommence share buy-backs due to policy uncertainty. The fall came despite releasing strong half yearly earnings, lifting underlying earnings by 10%, to $537m, and declaring a slightly higher dividend of $0.55 per share. The result was boosted by higher electricity prices. AGL maintained its guidance for the year.

The Australian futures market points to a 0.7% fall today, being driven by weaker overseas markets.

Overseas Market 

European sharemarkets fell on Thursday, weighed down by a downgrade to European growth forecasts, as the European Commission lowered its 2019 forecast from 1.9% to 1.3%. The UK FTSE 100 lost 1.1%, the German DAX fell 2.7%, while the broad based STOXX Europe 600 fell 1.5% after seven days of gains. 

US sharemarkets also fell overnight on worries about the progress of the US-China trade negotiations. White House economic adviser Larry Kudlow told Fox Business Network there was a "pretty sizable distance to go" in the trade talks. The downgrades to European economic growth forecasts also weighed on sentiment. The Dow Jones and S&P 500 both fell 0.9% and the NASDAQ lost 1%.

CNIS Perspective 

The report card on the US earnings season reads quite well so far, with about half of the S&P 500 companies having reported their fourth quarter results. 

70% have reported a positive net earnings per share surprise and 62% have reported top line sales results above expectations. 

The aggregate S&P 500 earnings growth outcome is hovering around 12% year on year. If this remains the case, it would mark the fifth straight quarter of double digit earnings per share growth. 

The estimate for 2019 calendar year is earnings per share of around 5.5%, rising to 11% in 2020.

The last couple of years has certainly seen some outstanding US company earnings growth and, as expected, this is starting to taper off now.

S&P Earnings Growth:  Q4 2018

Should you wish to discuss this or any other investment related matter, please contact your Investment Services Team on (02) 4928 8500.


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, Dow Jones, Australian Market, ASX, international markets

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