Pre-Open Data
Key Data for the Week
- Tuesday – AUS – NAB Business Conditions and Confidence
- Wednesday – AUS – MI Consumer Confidence
- Wednesday – CHINA – Trade Balance
- Wednesday – US – Consumer Price Index
Australian Market
The Australian sharemarket lost ground yesterday, as the ASX 200 dropped 1.1%. This comes as investors await key global economic data this week, that will give an insight into future inflation readings.
The Information Technology sector was among the worst performers, as Chinese tech giants Alibaba and Tencent Holdings received further fines for failure to properly report past transactions. As a result, Xero dropped 3.2% and Megaport shed 2.1%, while buy-now-pay-later providers, Block and Zip, conceded 2.6% and 5.7% respectively.
The major miners weighed on the Materials sector, which dropped 2.8%. BHP led the losses, down 3.1%, while Fortescue Metals and Rio Tinto lost 2.6% and 2.2% respectively. Lithium miners also lost ground after posting a solid rally last week; Allkem slipped 4.4%, Core Lithium lost 3.2% and Pilbara Minerals finished the session 2.6% lower.
The Health Care sector provided the only bright spot on the market yesterday, as it added 0.1%. As a result, CSL was up 0.2%, while Australian Clinical Labs rose 3.8%.
The Australian futures market points to a 0.28% gain today, bucking the trend from overseas markets.
Overseas Markets
European sharemarkets were lower overnight, as new COVID restrictions imposed in China had investors worried over the potential future demand for resources. As a result, London-listed Rio Tinto dropped 1.2%, while Glencore shed 2.6%. This also resulted in losses in the Automakers sector; BMW slipped 3.0% and Renault conceded 5.1%, while Stellantis finished the session 2.1% lower.
Luxury goods providers were also sold off amid potential decreasing demand from China. LVMH Moet Hennessy Louis Vuitton slipped 0.4% and Christian Dior fell 0.7%, while Burberry Group closed down 1.0%.
By the close of trade, the STOXX Europe 600 lost 0.5% and the German DAX slipped 1.4%, while the UK’s FTSE 100 closed relatively flat.
US sharemarkets also lost ground on Monday, following increased COVID cases in China and the fines handed down to leading technology companies. As a result, the Information Technology sector closed lower; Netflix shed 5.2% and PayPal Holdings dropped 4.0%, while Apple and Microsoft conceded 1.5% and 1.2% respectively.
Among other notable movers, electric vehicle infrastructure provider ChargePoint Holdings dropped 10.8%, Tesla slipped 6.6% and Taiwan Semiconductor Manufacturing Co. finished the session 2.9% lower. By the close of trade, the Dow Jones conceded 0.5% and the S&P 500 dropped 1.2%, while the NASDAQ fell 2.3%.
CNIS Perspective
China’s Ministry of Finance is considering allowing local governments to sell 1.5 trillion yuan (US$220 billion) of special bonds in the second half of 2022, which would see an unprecedented acceleration of infrastructure funding.
A short-term barrage of stimulus would be an attempt to hit Chinese growth targets in light of the lockdowns prompted by their zero-COVID policy stance in the first half of the year.
This would mark the first time that the issuance has been fast tracked in this way, as President Xi Jinping’s government tries to achieve its annual growth target of around 5.5%.
China, focusing on its growth targets, is potentially leading to a boom for our materials industry, which comprises 24.9% of the ASX 300 index. The announcement last week saw copper futures rise 4%, tin climb 5% and the iron ore price stabilise after a month of gradual decline.
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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