Morning Market Update - 27 June 2022

By Phillip Smith - June 27, 2022

Pre-Open Data

International Markets vs Australian Market

Key Data for the Week

  • Monday – CHINA – Industrial Profits
  • Tuesday – UK – Nationwide House Prices
  • Tuesday – US – Consumer Confidence
  • Wednesday – AUS – Retail Sales
  • Wednesday – US – Gross Domestic Product
  • Thursday – EUR – Unemployment Rate
  • Thursday – UK – Gross Domestic Product
  • Friday – EUR – Consumer Price Index

S&P ASX 200

Australian Market

The Australian sharemarket closed higher on Friday, as gains from the Information Technology sector outweighed weakness in the Energy sector. As a result, the local index finished the week 1.6% higher, its best performance since mid-March.

The Information Technology sector soared 6.0%, as a drop in bond yields aided the sectors performance. Accounting software provider, Xero, was amongst the best performers, up 7.5%, while Afterpay’s owner, Block, jumped 10.9%.

Lithium providers also provided a bright spot on the market on Friday, despite the Materials sector slipping 0.1%. Vulcan Energy lifted 26.8%, after Stellantis, the owner of Fiat and Chrysler, agreed to purchase an eight per cent holding in the business. Among the other producers, Pilbara Minerals added 8.8%, while Allkem closed the session 4.7% higher.

The Energy sector was the main laggard on Friday, as the price of oil continued its recent weakness. As a result, Woodside Energy dropped 1.7% and Santos conceded 1.8%, while Beach Energy lost 2.5%.

The Australian futures market points to a 1.57% gain today, driven by stronger overseas markets.

Overseas Markets

European sharemarkets were higher on Friday, as the Information Technology sector led a broad-based rally. As a result, Prosus added 4.6% and Infineon Technologies rose 3.0%, while ASML Holdings closed the session 5.3% higher. The Health Care sector also enjoyed gains; AstraZeneca closed up 3.1%, while Novartis gained 3.0%.

By the close of trade, the STOXX Europe 600 added 2.6% and the German DAX lifted 1.6%, while the UK’s FTSE 100 gained 2.7%.

US sharemarkets also closed higher to end the week, with the gains also led by the Information Technology sector. NVIDIA Corporation was amongst the strongest performers, up 5.6%, while Alphabet and Apple rose 5.2% and 2.5% respectively. Cybersecurity providers also increased; CrowdStrike Holdings jumped 5.8%, while Fortinet lifted 4.1%.

By the close of trade, the Dow Jones added 2.7% and the S&P 500 lifted 3.1%, while the NASDAQ gained 3.4%.

CNIS Perspective

US equities closed sharply higher on Friday, with the S&P 500 and NASDAQ capping off big gains of 6.45% and 7.49% respectively for the week, after months of volatile trading.

Supporting this rally was a small 15 basis point rise in US 10-year treasury yields, but the emphasis was on heightened commentary of equities potentially being oversold, following back-to-back five percentage point weekly declines.

The S&P 500 is now trading on a forward price to earnings ratio of 16.43, versus its 15-year average of 15.64 and its September 2020 stimulus and low interest rate height of 23.77.

S&P 500 - Last 12 Months

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