Pre-Open Data
Key Data for the Week
- Monday – UK – Industrial Production
- Tuesday – AUS – NAB Business Conditions and Confidence
- Tuesday – UK – Unemployment Rate
- Tuesday – US – Consumer Price Index
- Wednesday – UK – Consumer Price Index
- Thursday – AUS – Unemployment Rate
- Thursday – US – Retail Sales
Australian Market
The Australian sharemarket enjoyed its best day of the week on Friday, as it rose 0.5%. Markets weakened during the week off the back of talks of rate rises from the US and Australian central banks. Last week, the RBA maintained the cash rate at 0.10%, however, alluded to future rate rises.
The Materials sector was the best performer on the market, up 1.3%. The mining heavyweights all gained; Rio Tinto added 0.2% and Fortescue Metals lifted 0.4%, while BHP closed the session 1.7% higher. Gold miners also lifted, as Northern Star Resources was up 1.2% and Evolution Mining rose 2.1%. Despite Friday’s performance, the Materials sector lost 0.8% over the week.
The big four banks had mixed performances, as the sector increased 0.2%. ANZ led the gains, up 0.6%, while Commonwealth Bank added 0.1%. NAB closed the session relatively flat, while Westpac lost less than 0.1%. Local fund managers, Australian Ethical Investment and Magellan Financial Group, were also mixed on Friday, however rose 4.5% and 4.1% respectively over the week.
Mixed performances were also seen in the Energy sector, as the price of crude oil has settled around approximately US$100 per barrel. Woodside Petroleum lost 1.5%, while Santos rose 1.3%.
The Australian futures market points to a 0.36% rise today.
Overseas Markets
European sharemarkets finished mostly higher on Friday, as the Financials and Energy sectors led the gains. Among the oil majors, BP added 1.6% and Royal Dutch Shell lifted 3.2%, while TotalEnergies closed the session 1.7% higher. Deutsche Bank led the gains in the Financials sector, up 3.9%, while ING Groep and Barclays lifted 2.9% and 2.5% respectively.
By the close of trade, the STOXX Europe 600 rose 1.3% and the German DAX lifted 1.5%, while the UK’s FTSE 100 gained 1.6%.
US sharemarkets also rose, as an increase in the oil price led the Energy sector higher. As a result, ConocoPhillips added 3.1% and Chevron lifted 1.7%. The Information Technology declined; NVIDIA Corporation led the losses, down 4.5%, while Amazon and Alphabet conceded 2.1% and 1.8% respectively.
By the close of trade, the S&P 500 lost 0.3% and the NASDAQ shed 1.3%, while the Dow Jones bucked the downward trend to close up 0.4%.
CNIS Perspective
De-globalisation and geopolitical concerns are increasing the risk of stagflation, where slowing economic growth combines with accelerating inflation, creating a negative ‘wealth effect’ which flows on to reduced asset prices.
If stagflation does become evident, equities tend to suffer in this environment given companies face simultaneous falling revenues and rising costs, which squeezes profit margins.
However, some stocks are more insulated than others, given certain properties and/or positive correlation to inflation.
These companies tend to be those whose products and services are essential to people’s everyday lives, or the niche of companies that thrive regardless of the economic cycle, such as consumer staples and healthcare.
Australian GDP growth is forecast at 3.4% this year, with inflation figures at 3.5% annualised.
In addition, with US inflation at 7.9% annualised and GDP growth forecast at 6.9% this year, stagflation is not yet a concern unless we start to see growth figures declining.
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.
