Morning Market Update - 8 November 2019

Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

Key economic data released this week:

    • Thursday – UK – BoE Interest Rate Decision – The BoE kept rates on hold.
    • Friday – AUS – Home Loans
    • Friday – CHINA – Trade Balance
S&P ASX 200 Last 12 Months

Australian Market

The Australian sharemarket rose 1.0% yesterday, with all sectors in the black, except Energy. The Information Technology sector was the strongest performer. Xero added 9.5%, after the company reported a large lift in revenue and subscribers. The company now boasts 2 million subscribers using its cloud accounting software.

The Financials sector also posted strong gains, led by the big four banks. NAB gained 2.2%, despite posting a 10.6% fall in annual profit, which was not as bad as expected. NAB also cut its dividend by 16% to $0.83 per share. Of the other big banks, Commonwealth Bank rose 1.3%, Westpac added 0.7% and ANZ increased 0.4%. Zip soared 16.9% after they became the first buy-now-pay-later company to partner with Amazon Australia.

James Hardie rose 7.8%, to hit an all-time high of $26.62, after announcing a 22% rise in profit for the quarter. Profits were helped by strong U.S. business, which has led the group to raise its guidance for FY20 to US$340-$370m.

The Health Care sector was lifted by gains from CSL and Cochlear, up 1.1% and 0.9% respectively.

The Australian futures market points to a 0.19% rise today, being driven by stronger overseas markets.

Overseas Markets

European sharemarkets rose to 4-year highs on Thursday, with the broad based STOXX Europe 600 up 0.4%, as positive earnings results boosted sentiment. Wind turbine maker Vestas climbed 11.0% after a jump in Q3 profit. French construction company Eiffage rose 1.2%, while its competitor Vinci fell 0.6%.

US sharemarkets also lifted to fresh record highs on trade deal optimism. Gains were across most sectors with Energy the strongest performer. Technology stocks were mixed; Alphabet and Apple rose 1.2% and 1.1% respectively, while Facebook lost 0.6%. Financials services companies Visa and MasterCard added 0.9% and 1.1% respectively, while PayPal slipped 0.2%.

By the close of trade, the Dow Jones added 0.8%, while the S&P 500 and NASDAQ both lifted 0.3%.

CNIS Perspective

Lost in the midst of the Melbourne Cup hype was the release on Monday of Australia’s disappointing retail sales data.

The fall of 0.2% for the quarter was the first quarterly decline since 1991 and, given the significance of consumer spending for the economy, this data can only be viewed as a dismal reflection on the Australian economy.

Household Final Consumption Expenditure is a critical component of the Australian GDP number, and it has fallen 30% in recent years.

Australia’s GDP is due to be released on 4th December, but with dwelling construction and private expenditure weak, it’s difficult to see this data being anything else but soft, with early forecasts suggesting GDP growth will be lucky to hit 0.5% for the quarter.

Australian retail trade volumes

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 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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