Pre-Open Data
Key Data for the Week
- Wednesday – AUS – Retail Sales rose by 1.6% in March.
- Wednesday – US – FOMC Funds Rate was increased by 0.50%, to 0.75%-1.00%.
- Thursday – AUS – Trade Balance
- Thursday – UK – BoE Bank rate Decision
Australian Market
The Australian sharemarket inched 0.2% lower on Wednesday, in the first full trading day since the Reserve Bank raised the cash rate for the first time in over a decade. Performance was mixed, as only 5 out of 11 sectors advanced.
Unsurprisingly, the interest rate sensitive REITs sector was the major detractor, down 1.5%, dragged lower by index heavyweight Goodman Group (-2.4%). Other notable movers included Scentre Group (-1.1%) and Stockland (-1.7%).
Meanwhile, the Financials sector advanced 0.7%, pushed higher by the major banks, after they raised variable home loan rates in response to the higher cash rate. Gains were led by NAB (1.0%), followed by Westpac and Commonwealth Bank, both up 0.7%. ANZ (0.4%) was the first bank to release their half-yearly results, in which it reported a 14% rise in operating income and a 4% annual increase in cash profits.
In other company news, electronics retailer JB Hi-Fi fell 4.8%, despite its report that, “sales momentum has continued” into the fourth quarter. However, it also acknowledged that supply chain disruptions are still ongoing.
The Australian futures market points to a 0.42% increase today, after strength from US markets overnight.
Overseas Markets
European sharemarkets sank on Wednesday, weighed down by disappointing earnings results from retailers Boohoo (-12.4%) and Pandora (-2.1%), alongside Swedish builder Skanska (-9.8%). Another notable mover included HelloFresh, down 10.1%. By the close of trade, the STOXX Europe 600 lost 1.1%, the UK FTSE 100 gave up 0.9% and the German DAX edged 0.5% lower.
US sharemarkets experienced broad-based gains on Wednesday, as the Federal Reserve Chair Jerome Powell ruled out larger rate rises in future meetings. Hence, while the cash rate increased 0.5%, which was already expected, the news was evidently seen as positive by market participants. All sectors advanced, led by Energy (4.1%), Communication Services (3.7%) and Information Technology (3.5%). By the close of trade, the Dow Jones, S&P 500 and NASDAQ all climbed between 2.8%-3.2%.
CNIS Perspective
As we eluded to yesterday, the property (or housing) market should be one of the first sectors to feel the effects of the RBA’s rate hikes, which commenced on Tuesday after more than an 11 year absence.
March housing data released yesterday shows a healthy 1.6% jump in housing finance, following a 3.5% decline in the Omicron effected February. The increase in March was led by investors, which rose to a new record high, and up 2.9% on the February number, while owner occupied lending increased 0.9%.
It’s widely anticipated the commencement of the RBA’s hiking cycle will take the steam out of the housing market, particularly considering we are coming off record highs in new housing lending.
Also released yesterday was record level Retail Sales data, which saw 9.4% annual growth, taking retail sales to 21% above pre pandemic levels. The big question is how much of this jump in retail sales is due to price increases (inflation) and how much is attributed to higher sales volumes.
While the outlook for consumer spending looks solid given low unemployment, wages growth increases and strong household balance sheets, higher interest rates are intended to take the steam out of things going forward.
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.
