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Morning Market Update - 8 May 2019


Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

  • Tuesday – AUS – Trade Balance – The trade surplus remained elevated at $4.95 billion for March, above consensus of $4.30 billion, however, down slightly from a record high $5.14 billion for February.
  • Tuesday – AUS – RBA Interest Rate Decision – The Reserve Bank left the cash rate unchanged yesterday at 1.50%.
  • Wednesday – CHINA – Trade Balance
  • Wednesday – EUR – German Industrial ProductionS&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket gained 0.2% yesterday, led by gains in the Materials sector. BHP rose 1.4% and Rio Tinto added 2.3%, after agreeing to buy a fleet of autonomous trucks and other mining equipment from Caterpillar for its new Koodaideri iron ore mine in Western Australia. Fortescue Metals climbed 6.3% after iron ore prices increased, following the court decision to suspend operations at Vale’s Brucutu mine in Brazil. 

Information Technology stocks helped buoy the market. Link Administration and online job company Seek both rose 0.5%. Seek closed at a 6 month high of $19.74. 

The Financials sector closed lower. The big four banks all lost between 0.2% and 0.4%, with Commonwealth bank the weakest performer. The Health Care sector also finished marginally lower; Healthscope was flat, CSL fell 0.2%, while Ramsay gained 0.2%. 

The Australian futures market points to a 0.77% fall today, being driven by weaker international markets. 

Overseas Markets

European sharemarkets were weaker on Monday, following escalating worries about the US-China trade wars after President Trump threatened to lift tariffs on Chinese goods on Friday. The broad based STOXX Europe 600 fell 1.4%, the German DAX and the UK FTSE 100 both lost 1.6%. 

US sharemarkets were also weaker overnight, on the trade concerns between US and China, extending Monday’s losses. The S&P 500 lost 1.7%, the Dow Jones fell 1.8% and the NASDAQ slipped 2.0%. 

Information Technology, Industrials and Health Care stocks were amongst the worst performers. Boeing fell 3.9%, Activision slipped 3.1% and Apple lost 2.7%, while Facebook and Microsoft both slid 2.1%. 

CNIS Perspective 

The Royal Commission into banking tarnished the reputation of Australian banks somewhat, but Westpac seem to be going out of their way to win back their shareholders' affection. 

Since 1993, Westpac have paid their interim dividend in the first week of July, but this year have opted to bring it forward and pay it to shareholders in late June.

By paying the dividend early, shareholders will be able to receive the June dividend’s franking credit as a refund, if their circumstances dictate. That’s three lots of franking credits in one year, not just two. 

They are obviously of the opinion Labor will win the election and abolish franking credit refunds in the 2020 financial year. 

That’s a big win for the bulk of shareholders!!

The flip side of course, is if Labor don’t win the election. 

The downside is shareholders will need to include three dividends in their tax returns for 2019 and some high income earning shareholders may need to pay additional ‘top up’ tax as a result. 

It’s a big call by Westpac that should win them some ‘brownie points’ from the majority of their shareholders. 

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, Dow Jones, Australian Market, ASX, international markets

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