Pre-Open Data
Key Data for the Week
- Tuesday – AUS – Retail Sales fell 1.7% in August.
- Tuesday – AUS – ANZ Consumer Confidence rose 0.4% in the week ending 26 September.
- Tuesday – US – Housing Price Index rose 1.4% in July, down from 1.7% in June.
- Wednesday – EUR – Consumer Confidence
Australian Market
The Australian sharemarket lost 1.5% yesterday, as a result of expectations the US Federal Reserve will soon begin tapering economic stimulus programs. This led to US bond yields reaching their highest point in three months.
The Information Technology sector weakened during yesterday’s trading to close 2.9% lower. Buy-now-pay-later providers lost ground; Afterpay and Zip both conceded 1.8%, while Sezzle fell 3.4%. Accounting software company, Xero, slumped 6.4%, while Artificial Intelligence provider, Appen, shed 4.4%.
Losses among the major miners weakened the Materials sector. Fortescue Metals was the hardest hit, down 5.6%, while Rio Tinto and BHP lost 3.0% and 2.3% respectively.
As many parts of the world begin the re-open, the demand for oil is growing, benefiting the oil majors. Woodside Petroleum jumped 5.0% and Santos lifted 5.6%, while Beach Energy soared 10.5%. As a result, the Energy sector provided the best performance on the market yesterday, up 4.3%.
The Australian futures market points to a 1.15% decline today, driven by weaker overseas markets.
Overseas Markets
European sharemarkets lost ground overnight, as rising bond yields weakened the Information Technology sector. As a result, Infineon Technologies dropped 4.6%, ASML Holdings lost 6.6% and Prosus shed 1.2%. A rise in the price of oil helped the major oil providers; BP added 2.1%, while Royal Dutch Shell closed the session 1.6% higher.
By the close of trade, the STOXX Europe 600 lost 2.2%, while the German DAX and UK’s FTSE 100 slipped 2.1% and 0.5% respectively.
US sharemarkets ended lower on Tuesday as concerns remain over rising bond yields and inflation. The inflationary worries weakened the high-flying technology stocks, as PayPal fell 4.1%, Microsoft conceded 3.6% and Amazon dropped 2.6%. The Health Care sector also lost ground; Moderna slipped 6.0% and United Health Group dropped 1.6%.
By the close of the session, the S&P 500 and Dow Jones lost 2.0% and 1.6% respectively, while the NASDAQ finished the session 2.8% lower.
CNIS Perspective
The slated end of lockdown in NSW next month will no doubt provide welcome relief to some sectors that have suffered during the lockdowns, notably hospitality.
The graph below highlights the bounce that occurred after last year’s easing of lockdowns and it’s hoped that higher case numbers this year, doesn’t cause consumer caution that softens the 2021 bounce.
However, beyond the near-term uncertainty, consumer spending looks set for solid growth. Ongoing fiscal and monetary support, the build-up of large household saving buffers and higher household wealth, following massive dwelling price growth, will all bolster spending as restrictions eventually ease.
This is crucial to avoid a negative GDP number for the December quarter, given it’s almost certain the September quarter will be.
Should you wish to discuss this or any other investment related matter, please contact your Investment Services Team on (02) 4928 8500.
Disclaimer
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