Pre-Open Data
Key Data for the Week
- Tuesday – EUR – Consumer Price Index rose to 8.1% in May, up from 7.4% in April.
- Tuesday – US – Consumer Confidence declined to 106.4 in May, from 108.6 in April.
- Wednesday – AUS – CoreLogic Dwelling Prices
- Wednesday – EUR – Unemployment Rate
Australian Market
The Australian sharemarket weakened during the last trading session of May, to close down 1.0%. All sectors closed in the red, with the Financials and Information Technology sectors the main laggards. Over the month, the local ASX 200 gave up 3.0%, its worst monthly decline since January. The Energy sector also weakened 0.9% over May, its first monthly fall in 2022.
Mining heavyweights posted gains on Tuesday following stronger commodity prices; Fortescue Metals added 1.3% and Rio Tinto rose 0.6%, while BHP slipped 0.7%. Gold miners also advanced; Evolution Mining closed up 0.5% and Newcrest Mining gained 0.1%, however, Northern Star Resources finished the session flat.
The Financials sector lost 2.0%, weighed down by losses amongst the major banks. ANZ was the main underperformer, down 2.8%, followed by Commonwealth Bank, which gave up 2.1%, while NAB and Westpac fell 1.9% and 1.4% respectively. Insurers Suncorp and Insurance Australia Group tumbled 6.4% and 3.1% respectively, after investment bank Morgan Stanley downgraded both companies and stated they both face risks due to climate change.
The Energy sector slipped 0.4%; Beach Energy climbed 5.2%, while Santos finished the session flat and Woodside Energy fell 1.6%.
The Australian futures market points to a 0.36% fall today, driven by weaker overseas markets.
Overseas Markets
European sharemarkets were mostly lower on Tuesday as inflation in Europe rose to 8.1% in May, compared to estimates of 7.7%, causing speculation that further interest rate hikes will be implemented. Banking stocks weakened; Deutsche Bank lost 2.6% and HSBC lost 0.7%, while Lloyds Bank and Barclays Bank eased 0.6% and 0.3% respectively. Consumer goods multinational Unilever jumped 9.4%, after Nelson Peltz, Chief Executive of US asset management company Trian Fund Management, joined the company’s board.
By the close of trade, the UK FTSE 100 added 0.1%, while the STOXX Europe 600 fell 0.7% and the Garman DAX lost 1.3%.
US sharemarkets also eased overnight. The Energy sector was the main laggard, down 1.7%. Chevron and ConocoPhillips both shed 2.0%, while ExxonMobil gave up 1.6%. Technology majors closed lower; NVIDIA slid 0.7%, while Apple and Microsoft both eased 0.5%. However, Google parent company Alphabet bucked the trend to add 1.1%. By the close of trade, the NASDAQ closed down 0.4% and the S&P 500 fell 0.6%, while the Dow Jones declined 0.7%.
CNIS Perspective
Inventory levels in the US are rising and this may be the start of weakening inflationary pressures.
Post pandemic, retailers were forced to run down their inventories because of supply chain disruptions and shortages of goods, and given the pent-up consumer demand, it drove inflationary pressures.
The reverse is now happening, with restocking occurring at the same time there is weakness in consumer demand.
The sluggish demand is resulting in liquidating stocks at discounted prices.
With the pipeline between retailers and consumers softening, it suggests that inflationary pressures may have also peaked.
Should you wish to discuss this or any other investment related matter, please contact your Wealth Management Team on (02) 4928 8500.
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