Pre-Open Data
Key Data for the Week
Australian Market
The Australian sharemarket added 1.3% yesterday in what was a light day of trade given the public holiday across four states and territories.
The Financials sector jumped 2.6% following the completion of Commonwealth Bank’s $6 billion off-market share buyback. As a result, the company’s share price added 5.1%. ANZ lifted 2.2%, while Westpac and NAB gained 2.1% and 1.9% respectively. Fund Managers were mixed; Australian Ethical Investment lost 1.7%, while Challenger lifted 1.6%.
Travel stocks added to their recent gains, with the hope that international travel will commence before the end of the year. As a result, Flight Centre soared 9.6% and Webjet lifted 2.9%, while Qantas closed the session 1.7% higher.
The major miners had a mixed trading session; BHP and Rio Tinto both added 0.2%, while Fortescue Metals shed 1.2%. Gold miners enjoyed gains, as Northern Star Resources lifted 2.3% and Evolution Mining closed 1.4% higher.
The Australian futures market points to a 0.95% decline today, driven by weaker overseas markets.
Overseas Markets
European sharemarkets lost ground overnight, as rising bond yields and more Evergrande issues raised concern. The Information Technology sector was the hardest hit, as Prosus lost 2.4% and ASML Holdings conceded 3.9%. Travel stocks gained after it was reported the UK will open to more countries for hotel quarantine-free travel later this week; Ryanair added 2.1% and International Consolidated Airlines Group lifted 1.5%. By the close of trade, the STOXX Europe 600 lost 0.5%, while the German DAX and UK’s FTSE 100 slipped 0.8% and 0.2% respectively.
US sharemarkets ended lower on Monday, as rising bond yields weakened the Technology sector. As a result, Amazon dropped 2.9%, Apple lost 2.5% and Microsoft shed 2.1%. The Financials sector was mixed, as JPMorgan Chase lost 0.2% and Goldman Sachs conceded 1.5%, while Bank of America added 0.6%.
By the close of the session, the S&P 500 and Dow Jones lost 1.3% and 0.9% respectively, while the NASDAQ finished the session 2.1% lower.
CNIS Perspective
Across Australia, the new average household mortgage stands at $580,900 as at the end of August, an incredible 16% increase over the past year, or roughly $80,000.
The average mortgage has no doubt been influenced by low interest rates. Home prices have been rising in line with higher mortgage values and households are seen to be taking advantage of refinancing at lower rates, financing renovations or purchase of other items in the household budget.
However, what hasn’t lifted in line is higher wages, and this continues to be some way off.
If borrowers are required to find an extra $80,000 or more with no additional income, this will influence future spending and lifestyle choices, which is going to limit economic growth in coming years.
With this in mind, we look to be heading into another cycle of higher lending regulation to reduce financial risks. The RBA has already hinted at limiting high debt-to-income ratios, and more is set to come if mortgages continue to rise.
Should you wish to discuss this or any other investment related matter, please contact your Investment Services Team on (02) 4928 8500.
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