Pre-Open Data
Key Data for the Week
- Monday – AUS – MI Inflation
- Tuesday – AUS – Interest Rate Decision
- Tuesday – US – Trade Balance
- Wednesday – EUR – Gross Domestic Product
- Wednesday – EUR – Industrial Production
- Thursday – CHINA – Trade Balance
- Thursday – EUR – ECB Policy Decision
- Friday – CHINA – Consumer Price Index
- Friday – US – Consumer Price Index
Australian Market
The Australian sharemarket closed the week on a positive note, as it added 0.9% on Friday. This comes as Shanghai begins to reopen following strict COVID lockdowns and as a result, most sectors ended the week in positive territory.
The Materials sector was the best performer, up 2.6%, as the iron ore price continues its recent run of strength to currently sit at ~US$140 per tonne. As a result, Fortescue Metals lifted 4.1% and Rio Tinto gained 2.7%, while BHP rose 2.5%. Lithium miners also performed strongly, despite being heavily weakened the day prior; Pilbara Minerals added 7.5%, Allkem lifted 3.8%, while Core Lithium and Liontown Resources rose 6.6% and 6.7% respectively.
Performances were mixed among the major banks, as the Financials sector eked out a less than 0.1% gain. Westpac added 0.3% and ANZ lifted 0.2%, while Commonwealth Bank and NAB dropped 0.2% and 0.1% respectively. Local fund managers also gained; Australian Ethical Investment added 1.5% and Challenger lifted 1.8%.
The Australian futures market points to a 0.44% fall today, driven by weaker overseas markets on Friday.
Overseas Markets
European sharemarkets closed slightly lower on Friday, as the UK markets were closed for the Queen’s Platinum Jubilee holiday. Automaker providers were among the hardest hit, as Porsche dropped 1.7% and Volkswagen slipped 1.4%, while BMW conceded 1.1%. The Information Technology sector also lost ground, as ASML Holdings lost 1.8% and Infineon Technologies dropped 1.8%.
By the close of trade, the STOXX Europe 600 lost 0.3% and the German DAX shed 0.2%, while the UK’s FTSE 100 remained closed. Over the week, the STOXX Europe 600 fell 1.0%, while the German DAX and the UK’s FTSE 100 slipped 0.8% and 1.0% respectively.
US sharemarkets also ended the week lower, as losses in the Information Technology sector weighed on the indices. NVIDIA led the losses, down 4.5%, while Alphabet and Amazon conceded 2.7% and 2.5% respectively.
By the close of trade, the Dow Jones dropped 1.1% and the S&P 500 lost 1.6%, while the NASDAQ fell 2.5%. However, over the week, the NASDAQ rose 1.2% and the S&P 500 was up 0.8%, while the Dow Jones closed 0.5% higher.
CNIS Perspective
The iron ore price saw its biggest weekly gain in three months after demand prospects brightened with COVID cases easing in China, stockpiles falling and the country vowing to carry out policies to stimulate growth.
Chinese officials noted on Thursday they would accelerate refunds of value-added taxes and ensure that local special bonds, which are mainly used to fund infrastructure projects, are issued in a smooth manner.
These planned infrastructure projects require demand for steel. China already accounts for 70% of the seaborne trade in iron ore (~1 billion tonnes) and relies on domestic production for a further 900 million tonnes.
Around three quarters of China’s domestic production needs a price of at least US$100 a tonne in order to operate commercially, while the cost of extracting iron ore is not much more than US$16 a tonne for Australian miners BHP and Rio Tinto.
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