Pre-Open Data
Key Data for the Week
- Tuesday – AUS – NAB Business Conditions and Confidence – Conditions declined 3 points in January, while Confidence rose 3 points.
- Tuesday – US – Trade Deficit widened to $80.7 billion in December.
- Thursday – US – Consumer Price Index
Australian Market
The Australian sharemarket closed up 1.1% yesterday, boosted by optimism in the Financials sector and an increase in the price of iron ore.
The Materials sector was the best performer on the market, up 2.2% as the iron ore price reached approximately US$150. Fortescue Metals jumped 3.3%, while BHP and Rio Tinto added 3.7% and 2.2% respectively. Lithium producers detracted from the sectors performance; Pilbara Minerals shed 2.7%, while Alkem closed the session 0.5% lower.
Macquarie Group rose 3.9% after the company reported their quarterly earnings, which included a record third quarter result given the improved overall market conditions within the quarter. The big four banks all improved; ANZ added 1.5% and Westpac lifted 1.4%, while NAB and Commonwealth Bank gained 0.3% and 0.6% respectively.
The Information Technology sector followed a weak lead from the US to close down 1.6%. Artificial Intelligence provider Appen shed 7.4%, while accounting software provider Xero shed 0.5%. Buy-now-pay-later companies Block and Zip conceded 6.3% and 2.3% respectively.
The Australian futures market points to a 0.32% gain today, driven by stronger overseas markets.
Overseas Markets
European sharemarkets closed higher overnight, as the Materials sector enjoyed an increase in the price of iron ore. As a result, London-listed Rio Tinto added 2.5%, while Glencore was up 1.9%. The Financials sector improved; Deutsche Bank gained 4.9%, ING Groep increased 3.6% and Barclays closed the session up 0.3%. The Energy sector was the main detractor given a slight decline in the price of oil; BP and Royal Dutch Shell lost 1.6% and 0.9% respectively.
By the close of trade, the STOXX Europe 600 closed relatively flat, while the UK’s FTSE 100 lost 0.2% and the German DAX added 0.2%.
US sharemarkets increased on Tuesday as all indices enjoyed gains. The Financials sector increased as a result of the recent jump in Treasury yields. Goldman Sachs added 0.5%, JP Morgan lifted 1.9% and Bank of America closed the session 1.8% higher.
The Information Technology sector increased, as the major technology companies improved. Amazon added 2.2% and Apple lifted 1.9%, while Microsoft and Netflix rose 1.2% and 0.4% respectively. Gains were also seen among semiconductor producers; Taiwan Semiconductor Manufacturing Co added 1.1%, while NVIDIA closed the session 1.5% higher.
By the close of trade, the NASDAQ added 1.3% and the S&P 500 rose 0.8%, while the Dow Jones closed 1.1% higher.
CNIS Perspective
While the US Federal Reserve has made it clear they are on a pathway to higher interest rates during 2022, the same clarity can’t be found in last week’s communication from the RBA.
Instead, a far more patient approach by the RBA is being adopted until a decent acceleration in wage growth is experienced. While they previously indicated raising the Official Cash Rate some time in 2023 was their intention, they now appear more open minded about a possible rate rise by the end of the 2022 calendar year.
As early as August, or as late as November, are now being touted as possible months in which they may move. The longer they leave rates low the greater chance unemployment falls further and the broader the benefits are spread.
Also, the longer they delay their move of the Official Cash Rate, the greater the expectation becomes for the Australian Dollar to fall further against the US Dollar.
Should you wish to discuss this or any other investment related matter, please contact your Wealth Management Team on (02) 4928 8500.
Disclaimer
The material contained in this publication is the nature of the general comment only, and neither purports, nor is intended to be advice on any particular matter. Persons should not act nor rely upon any information contained in or implied by this publication without seeking appropriate professional advice which relates specifically to his/her particular circumstances. Cutcher & Neale Investment Services Pty Limited expressly disclaim all and any liability to any person, whether a client of Cutcher & Neale Investment Services Pty Limited or not, who acts or fails to act as a consequence of reliance upon the whole or any part of this publication.
Cutcher & Neale Investment Services Pty Limited ABN 38 107 536 783 is a Corporate Authorised Representative of Cutcher & Neale Financial Services Pty Ltd ABN 22 160 682 879 AFSL 433814.
