Pre-Open Data
Key Data for the Week
- Monday – UK – Rightmove House Prices
- Tuesday – AUS – RBA Board Meeting Minutes
- Tuesday – EUR – Consumer Price Index
- Wednesday – EUR – Consumer Confidence
- Wednesday – UK – Consumer Price Index
- Thursday – EUR – ECB Policy Decision
- Friday – US – Markit Manufacturing
- Friday – UK – Retail Sales
Australian Market
The Australian sharemarket dropped 0.7% on Friday, to fall 1.1% over the course of the week. Losses were led by the Materials sector, which marks the sector’s sixth consecutive week of declines.
On Friday, Fortescue Metals was the worst performer in the Materials sector, down 6.2%, BHP dropped 3.5%, while Rio Tinto closed the session 2.9% lower. Lithium miners also lost ground; Allkem conceded 1.4%, while Pilbara Minerals slipped 2.9%. Over the week, the Materials sector dropped 6.1% as a result of demand related concerns coming out of China.
The Financials sector lost 0.4%, after quarterly reports from JP Morgan and Morgan Stanley in the US showed larger than expected declines in profits. As a result, ANZ shed 1.3% and Westpac lost 0.2%, while both NAB and Commonwealth Bank bucked the downward trend to add 0.5% and 0.1% respectively.
Among technology stocks, WiseTech Global rose 3.4% after the company upgraded full-year guidance, while Megaport closed the session 1.5% higher.
The Australian futures market points to a 0.87% gain today, driven by stronger overseas markets.
Overseas Markets
European sharemarkets were higher on Friday, led by gains in the Automakers and Energy sectors. Despite the price of oil continuing to weaken, BP added 2.7% and Royal Dutch Shell rose 3.0%. Among the automakers, BMW was the best performer, up 4.0%, while Stellantis added 2.3%. By the close of trade, the STOXX Europe 600 lifted 1.8% and the UK’s FTSE 100 gained 1.7%, while the German DAX rose 2.8%.
US sharemarkets also gained on Friday, driven by strong reports from Citigroup and Wells Fargo. Both companies posted positive earnings results and lifted 13.2% and 6.2% respectively. By the close of trade, the Dow Jones added 2.2% and the S&P 500 rose 1.9%, while the NASDAQ gained 1.8%.
CNIS Perspective
The US Dollar has benefitted from a rush to safety following the June 2022 US inflation reading of 9.1%, as it hovers near a 20-year high on expectations the Federal Reserve will continue their aggressive monetary policy path.
Two of the Fed's most hawkish policymakers said they favoured another 75 basis point rate hike this month, after a higher-than-expected reading of US inflation increased the likelihood of a full 1.0% rise.
The Euro is now hovering around parity with the US Dollar, trading at a near 20-year low of US$1.006 over the weekend, with the European Central Bank only expected to increase key rates by 25 basis points later this month.
The Euro is not the only currency the US Dollar has strengthened against in the past month, with the Australian Dollar trading at $0.68, and the British Pound at £1.19.
This currency strength benefits overseas investors (including Australians), investing in the US on this favourable US Dollar strength. It also has meant American consumers have benefited from cheaper imports and less expensive foreign travel to the detriment of exporters who will be feeling some pain.
Should you wish to discuss this or any other investment related matter, please contact your Wealth Management Team on (02) 4928 8500.
Disclaimer
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