Pre-Open Data
Key Data for the Week
- Wednesday – AUS – Consumer Confidence fell 3.0% to 83.8, and sits at lows normally only seen during recessions.
- Wednesday – CHINA – Trade Balance surplus widened by more than expected, as exports rose 17.9%, with imports up only 1.0% year on year.
- Wednesday – US – Consumer Price Index surged 1.3% in June, ahead of expectations, and represented the largest annual rate increase since 1981.
Australian Market
The Australian sharemarket inched 0.2% higher on Wednesday, supported by a rebound in Technology stocks. Seven out of eleven industry sectors advanced, led by the Information Technology and Consumer Discretionary sectors, which both added 1.2%. Meanwhile, the Energy sector was the primary detractor, down 1.8%, as oil and gas prices continued their descent amid concerns around global economic output.
Notable contributors in the session included Block Inc (3.7%) and Xero (1.3%), alongside Domino’s Pizza (3.3%) and Wesfarmers (1.2%). On the other hand, commodity related stocks including Woodside Energy (-2.9%), BHP Group (-1.4%) and Rio Tinto (-1.4%) were key detractors.
The Financials sector performed modestly, up 0.7%, to outperform the overall market. Commonwealth Bank and NAB both added 1.1%, while Westpac edged 0.3% higher and ANZ lost 1.2%.
In other news, Qantas Airways seemed to benefit from the decline in the price of crude oil, which fell below US$100 a barrel, as it advanced 4.3% on Wednesday. Another factor which likely contributed to this outperformance was its agreement to remove the vaccine mandate for international travel, which will be effective from Tuesday the 19th of July.
The Australian futures market points to a relatively flat open today.
Overseas Markets
European sharemarkets finished lower on Wednesday, weighed down the Automobile (-2.3%) and Construction and Materials (-1.8%) sectors. Other notable movers included Barclays (-1.9%), Tesco (-1.2%) and Vestas Wind Systems (-2.1%). By the close of trade, the STOXX Europe 600 (-1.0%), German DAX (-1.2%) and the UK FTSE 100 (-0.7%) all lost ground.
US sharemarkets closed slightly lower on Wednesday, after stronger than expected inflation data meant investors can expect more aggressive monetary policy tightening from the Federal Reserve. Most industry sectors declined between 0.6%-1.2%, while the Consumer Discretionary sector was a standout performer, up 0.9%. By the close of trade, the S&P 500 dipped 0.5%, the Dow Jones shed 0.7% and the NASDAQ inched 0.2% lower.
CNIS Perspective
It may not have crept into the official economic data yet, but surveys of consumer and business confidence confirms the RBA is getting what it wants – a slower economy.
Business confidence has slipped below its long run average in June, marking three consecutive months of decline under the weight of interest rate hikes, labour shortages, supply chain disruptions and global uncertainty.
From a consumer’s perspective, confidence has fallen 3% to its lowest level since August 2020 and around the lows reached in previous crises. Rising energy and food prices, and higher interest rates are squeezing household budgets.
Leading indicators suggest the momentum in economic activity will probably be sustained in the near-term. However, there may be a slowdown in consumer spending later this year, which in turn could flow onto weaker business conditions.
Should you wish to discuss this or any other investment related matter, please contact your Wealth Management Team on (02) 4928 8500.
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