Pre-Open Data
Key Data for the Week
- Monday – AUS – MI Inflation increased to 3.5% in annual terms in February, up from 3.0% in January.
- Monday – AUS – Retail Sales rose 1.8% in January, up 6.4% over the year to January.
- Tuesday – AUS – Dwelling Prices
- Tuesday – AUS – RBA Cash Rate Decision
Australian Market
The Australian sharemarket advanced 0.7% on Monday, boosted by strong gains amongst the Materials and Energy sectors. However, investors remain cautious as the military conflict between Ukraine and Russia heightens, and tensions continue to escalate between Russia and the west. For the month, the local ASX 200 gained 1.1%.
Insurers posted losses yesterday, weighed down by news of severe flooding in Queensland and Northern NSW; QBE Insurance fell 2.5% and Insurance Australia Group lost 4.0%, while Suncorp gave up 3.2% after the company recorded more than 5,000 claims relating to the floods, with estimates the flooding will cost the insurer approximately $75 million. All major banks except NAB (0.1%) closed weaker; Commonwealth Bank slipped 0.4%, while ANZ and Westpac closed down 0.3% and 0.1% respectively.
Gold miners were stronger as investors retreated to safe haven assets in response to the escalated conflict between Russia and Ukraine; Evolution Mining added 2.6% and Northern Star Resources gained 3.1%, while Newcrest Mining lifted 3.4%. Iron ore miners also enjoyed gains; Fortescue Metals closed up 2.3%, while Rio Tinto and BHP climbed 3.2% and 4.4% respectively.
In company news, buy-now-pay-later provider Zip Co entered a trading halt on Monday morning, as the company announced plans to purchase competitor Sezzle, in a deal worth $491 million.
The Australian futures market points to a 0.3% gain today.
Overseas Markets
European sharemarkets were weaker overnight. Banking stocks eased after economic sanctions that target Russia, including blocking Russian banks from the SWIFT global payments system, were imposed. Lloyds Bank fell 2.5% and Barclays Bank shed 3.7%, while HSBC and Deutsche Bank lost 4.4% and 5.2% respectively. Renewable energy stocks advanced; Vestas Wind Systems rallied 15.1% and Siemens Gamesa Renewable Energy jumped 14.4%, while Orsted gained 10.7%. By the close of trade, the STOXX Europe 600 slipped 0.1% and the UK FTSE 100 fell 0.4%, while the German DAX gave up 0.7%.
US sharemarkets were mixed on Monday. Banking stocks weakened; Bank of America fell 1.8% and JPMorgan Chase lost 4.2%, while Citigroup closed down 4.4%. The Energy sector posted gains; Chevron lifted 2.6%, while ExxonMobil rose 0.8%. Cybersecurity companies advanced on fears of cyber attacks from Russia; Crowdstrike gained 7.4% and SentinelOne added 6.9%, while Fortinet closed up 6.0%. By the close of trade, the NASDAQ lifted 0.4%, while the S&P 500 and Dow Jones fell 0.2% and 0.5% respectively.
CNIS Perspective
It hasn’t taken long for US and European Union sanctions on Russia to bite. The weekend’s movement to cut off Russian banks from the SWIFT global payments system has made exports and imports from, and to, Russia just about impossible.
The net result of these economic sanctions has undermined the Russian central bank's ability to defend its currency, the Rouble, which was in free fall yesterday.
The only hope Russia had to stem the outflow of the Rouble was raising interest rates, in an attempt to steady the currency and stop locals from withdrawing cash from ATMs.
The central bank of Russia more than doubled interest rates on Monday, to 20% from 9.5%, a massive 10.5% move in just one day!
There is only a limited response that the Russian central bank can impart to reduce the economic impact on the nation. The decision to cut access to SWIFT payments will be crippling and raising rates yesterday to an eye watering 20% only provided short term relief to the Rouble.
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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