Pre-Open Data
Key Data for the Week
Key economic data released this week:
- Thursday – US – Initial Jobless Claims fell to 793,000 for the week ending 6 February.
- Friday – EUR – Industrial Production
- Friday – UK – Gross Domestic Product
Australian Market
TThe Australian sharemarket eased 0.1% yesterday in a mixed session of trade. The Telecommunications sector rose, as Telstra added 2.5% after the release of its 1HFY21 results and announced a $0.08 dividend. The company saw a 10% fall in income and a 14% fall in EBITDA.
The Financials sector was also stronger, lifted by the big four banks, which all posted gains. Commonwealth Bank was the strongest performer, up 1.1%. Magellan Financial Group slipped 4.4% after the fund manager reported performance fees were down 70% from the previous year. AMP slumped 11.0% after the company reported NPAT fell 33% and its adviser numbers were down 26%, while the company also announced it will not pay a dividend.
AGL reported a $2.3 billion loss for the six months to December, in part due to the large asset write-offs previously announced. The company also said the outlook for the financial year looked challenging. Despite the weak results, AGL rose 1.3% and announced it will pay a first-half dividend of $0.41.
Newcrest mining outperformed, up 4.1%, after the goldminer announced net profit above expectations and expects gold production towards the upper end of guidance.
Nearmap fell 7.3% before being placed in a trading halt after a short seller argued its US business was failing.
The Australian futures market points to a relatively flat open today.
Overseas Markets
European sharemarkets closed higher on Thursday, with the broad based STOXX Europe 600 up 0.5%. Renewable energy companies Vestas Wind Systems and Siemens Gamesa lifted 5.8% and 5.0% respectively, while meal kit delivery company HelloFresh added 5.5%. The Financials sector underperformed; Barclays fell 1.2% and Germany’s Commerzbank slumped 6.0% after the lender said its loss deepened in the fourth quarter, while France’s second largest listed bank Credit Agricole bucked the trend to add 4.9%, after the company posted better than expected fourth quarter results.
US sharemarkets were mostly higher overnight, with the Information Technology sector the best performer, while Energy underperformed. Payment providers MasterCard and Visa lifted 2.6% and 2.2% respectively, while PayPal added 0.7%. Computer chipmaker, NVIDIA, added 3.3% to continue its recent strength and Microsoft rose 0.7%, while Apple and Facebook underperformed, down 0.2% and 0.5% respectively.
By the close of trade, the Dow Jones was flat, the S&P 500 rose 0.2% and the NASDAQ added 0.4%.
CNIS Perspective
The Commonwealth Banks’ first half of 2021 results gives an insight into the strength of Australian banks.
Most of the data released indicates the financial system has held up well during COVID-19, showing a gradual recovery with growing revenues and increased lending activity.
While the company did not increase its dividend, the cash retained on CBA’s balance sheet boosted their capital adequacy, resulting in an increase in credit quality or CET1 ratio.
This places the Australian financial sector in a good place as sentiment and growth return.
In fact, Australia’s big four banks are amongst the top six in the world for CET1 ratio, a safety measure implemented to protect an economy against a financial crisis.
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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