Pre-Open Data
Key Data for the Week
- Monday – CHINA – Trade Balance – The trade surplus widened to US$116 billion year-to-date in February.
- Tuesday – AUS – NAB Business Conditions & Confidence
- Tuesday – EUR – Gross Domestic Product
Australian Market
The Australian sharemarket retreated 1.0% yesterday, weighed down by the Information Technology and Health Care sectors, which lost 4.7% and 3.3% respectively.
The Energy sector rallied 5.3% following news the US and Europe have considered sanctions on Russian oil. Woodside Petroleum jumped 9.5% and Beach Energy lifted 6.3%, while Santos gained 5.3%.
Buy-now-pay-later providers weighed down the Financials sector; Afterpay owner Block tumbled 10.3%, while Zip Co and Sezzle slid 4.9% and 2.0% respectively. Artificial intelligence company Appen gave up 4.7% after it announced a minor investment in Mindtech Global, while accounting software provider Xero fell 2.4%.
Mining heavyweights were mixed; Fortescue Metals rose 1.8% and BHP lifted 0.9%, however, Rio Tinto shed 0.9% after the miner was issued a $750,000 fine for failing to disclose to investors that some of the company’s operations were not economically feasible. Gold miners posted strong gains; Northern Star Resources jumped 7.2% and Newcrest Mining added 5.2%, while Evolution Mining rose 4.5%.
The major banks were mostly weaker; Westpac led the losses, down 2.0%, while NAB and ANZ gave up 1.6% and 1.2% respectively. However, Commonwealth Bank added less than 0.1%. Fund managers also declined; Magellan Financial Group lost 7.3% and Australian Ethical Investment eased 6.8%, while Challenger slipped 2.2%.
The Australian futures market points to a flat open today.
Overseas Markets
European sharemarkets eased overnight. The Banking sector weakened; Deutsche Bank fell 2.8% and Barclays Bank gave up 3.0%, while Lloyds Bank and Credit Suisse lost 4.1% and 4.3% respectively. The Energy sector rallied on the back of higher oil prices; Royal Dutch Shell lifted 7.7%, while BP added 1.4%.
By the close of trade, the UK FTSE 100 closed down 0.4% and the STOXX Europe 600 lost 1.1%, while the German DAX gave up 2.0%.
US sharemarkets were also weaker on Monday, as the Consumer Discretionary and Communication Services sectors led the declines. The Information Technology sector gave up 3.7%, weighed down by cybersecurity companies; CrowdStrike fell 6.5%, while Fortinet retreated 13.1% after the company announced it has ceased operations within Russia. Renewable energy stocks posted gains; ChargePoint climbed 9.2% and NextEra Energy added 5.0%, while Enphase Energy gained 0.4%. By the close of trade, the Dow Jones slid 2.4%, while the S&P 500 and NASDAQ fell 3.0% and 3.6% respectively.
CNIS Perspective
China, the world’s second largest economy, unveiled an economic growth target of 5.5% this year. Despite the drop from 6.0% last year, it is far higher than the International Monetary Fund’s projection of a 4.8% expansion.
While China’s growth has been the envy of the developed world for decades, this target growth level will still be a challenge to achieve, with a well-documented fragile property market likely to continue to be a drag on the economy.
One thing the Chinese central bank still has up its sleeve, in contrast to most other global economic powerhouses, is interest rate flexibility and a low inflationary environment.
As developed economies are either hiking rates, or preparing to hike interest rates to curb rampant inflation, China doesn’t have an inflation issue, nor a need to normalise interest rates.
China’s benchmark interest rate sits at 3.7%, allowing the country the ability to ease monetary policy to support key areas and weak links in the economy, to achieve their economic growth goals this year.
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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