Pre-Open Data
Key Data for the Week
- Thursday – US – Markit Manufacturing PMI rose to 58.5 in March, versus the prior 57.3 and expected 56.5.
- Friday – UK – Retail Sales
- Friday – CHINA – Current Account
Australian Market
The Australian sharemarket inched 0.1% higher on Thursday, after it recovered from losses earlier in the session. The ASX 200 closed at its highest level in two months, as it further cemented gains made throughout the week.
The sector performance in the local sharemarket was mixed yesterday, however, was buoyed by a rise in the price of oil and iron ore. The Energy (2.0%), Utilities (2.6%) and Materials (1.0%) sectors were the strongest performers. Notable movers included Woodside Petroleum (2.8%), Whitehaven Coal (6.5%) and BHP (1.8%), alongside Origin Energy (3.0%) and AGL Energy (2.9%).
The Information Technology sector was the weakest performer, down 0.8%, as it partly gave up gains made on Wednesday. The most notable mover was Block (-2.3%), which had surged 7.5% in the previous session.
In company news, JB Hi-Fi rose 4.3%, after it revealed it has experienced, “heightened consumer demand and strong sales growth”. The retailer reported an 11.3% increase in sales this calendar year-to-date, when compared to last year. Meanwhile, Brickworks (5.0%), a building material manufacturer, posted a 24% rise in revenue, alongside a 254% surge in underlying EBIT. Additionally, NAB announced it had completed its $2.5 billion share buy-back, before it revealed plans for another $2.5 billion to be rebought.
The Financials (0.4%) sector weakened, after a mixed performance from the big banks. ANZ (-0.6%) edged lower, Westpac (0.4%) and NAB (0.2%) rose, while Commonwealth Bank (-0.1%) closed relatively flat.
The Australian futures market points to a 0.51% increase today.
Overseas Markets
European sharemarkets were mixed on Thursday, as market sentiment led investors to gravitate towards defensive sectors like Consumer Staples and Health Care. Meanwhile, retail stocks broadly lost 3.3%, while banks conceded 0.7%. Investors now anxiously await the outcome of the special NATO summit, where US President Joe Biden took part in a closed door session with European allies to discuss further trade sanctions on Russia. By the close of trade, the STOXX Europe 600 (-0.2%) and German DAX (-0.1%) closed lower, while the UK FTSE 100 firmed 0.1%.
US sharemarkets broadly advanced on Thursday, led by the Information Technology (2.7%) sector. Positive data from the S&P Global Purchasing Manager surveys lifted investor sentiment, which offset renewed inflation anxiety exhibited in Wednesday’s session. Standout performers in the session included chipmakers NVIDIA, which soared 9.8%, and Intel, which climbed 6.9%. By the close of trade, the S&P 500 (1.4%), NASDAQ (1.9%) and Dow Jones (1.0%) all closed higher.
CNIS Perspective
The yield curve is starting to gather more and more market attention of late, due to risk of inversion.
That’s because, an inverted yield curve, where short term yields are higher than long term yields, has preceded every US recession since 1960 and is therefore a closely watched metric among investors, regarding the outlook for the economy and markets.
The curve has been flattening through most of the year, with the elevation between 2 year yields and 10 year yields currently sitting at just under 0.25%. With rising inflation and a strong labour market, the US Federal Reserve has already started raising the cash rate.
Meanwhile, given the low probability of an immediate peaceful resolution between Russia and Ukraine, longer term yields are expected to remain suppressed as conservatism sees demand for longer dated bonds.
This will likely lead to a further flattening bias in the yield curve in the coming months and raise the potential for a yield curve inversion, and therefore growing concerns of an imminent recession.
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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