Pre-Open Data
Key Data for the Week
- Thursday – UK – Gross Domestic Product increased 5.5% in the second quarter, ahead of market expectations.
- Thursday – EUR – Consumer Price Index rose from 3.4% to 4.1%.
- Thursday – EUR – Unemployment Rate stayed firm at 5.5%.
- Friday – US – Markit Manufacturing PMI
Australian Market
The Australian sharemarket staged a storming rebound on Thursday, led by the Consumer Staples (2.7%) and Materials (2.4%) sectors, after Wednesday’s broad sell-off. The ASX 200 rose 1.9%, which marked its best day since late 2020, as all eleven sectors closed higher.
Australia’s supermarket stocks, Coles (2.2%) and Woolworths (2.8%), made considerable gains, even with news that dozens of stores in Melbourne may close due to staff being in COVID-19 isolation. Other key Consumer Staples stocks that performed well included Costa Group (3.5%) and A2 Milk (3.1%).
The Energy sector resumed its recent strong performance, up 2.0%, dragged ahead by Beach Energy (9.1%) and Viva Energy Group (4.9%). Meanwhile, the major miners had a strong day, as iron ore was stockpiled by Chinese steel mills ahead of a national holiday. BHP and Rio Tinto both advanced ~3.5%, while Fortescue Metals Group edged 1.1% higher.
The Financials sector also supported overall market performance, ahead 2.0%, as all major banks pushed higher. Westpac led the rally, up 3.3%, while ANZ, NAB and Commonwealth Bank closed up 2.4%, 2.2% and 1.7% respectively.
The Australian futures point to a 1.59% fall today.
Overseas Markets
European sharemarkets edged lower on Thursday, as the STOXX Europe 600 inched 0.1% lower, the German DAX conceded 0.7%, and the UK FTSE 100 gave up 0.3%. The market was mixed, as a fall in travel and leisure stocks (-2.2%) offset gains made by miners (2.0%). UK listed BHP and Rio Tinto shares rose 1.4% and 1.9% respectively. Banks closed relatively flat, although Barclays (1.0%) was a standout.
US sharemarkets all closed lower overnight, as mixed economic data and political tension worried investors. Markets struggle amid uncertainty, and recent internal Democratic division has risked a Government shutdown or, at the very least, some doubt as to what sort of policy agenda investors can expect. The Dow Jones, S&P 500 and NASDAQ fell 1.6%, 1.2% and 0.4% respectively. All sectors closed down, led by Industrials (-2.1%) and Consumer Staples (-1.9%). Key outperformers included cybersecurity stocks Fortinet (1.1%) and CrowdStrike (2.6%).
CNIS Perspective
Residential Building Approval data released yesterday surprised on the upside, with a 6.8% gain for August, despite lockdowns and the unwinding of the HomeBuilder scheme.
The bounce in approvals was driven by 13.7% growth in private multi-density dwellings (i.e. apartments and townhouses), which contributed 4.4 percentage points to growth. Private sector houses were also up 3.5% and contributed 2.3 percentage points to growth. Approvals are now around 20% below their historical peak experienced in March 2021, but remain around 18% above pre-COVID levels.
Demand continues to be supported by low interest rates and robust household savings.
The building industry is a key driver of economic growth, and the surge in building approvals over late 2020 and early 2021 should continue to support jobs, as NSW and Victoria come out of lockdown and the Australian economy recovers over the December quarter and into 2022.
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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