Pre-Open Data
Key Data for the Week
- Tuesday – AUS – NAB Business Conditions and Confidence – Conditions rose 9 points and Confidence added 3 points in March.
- Tuesday – UK – Unemployment Rate declined to 3.8% in the three months to February 2022.
- Tuesday – US – Consumer Price Index increased 1.2% in March.
- Wednesday – UK – Consumer Price Index
Australian Market
The Australian sharemarket lost ground yesterday, ahead of last night’s inflation reading out of the US. Rising inflation still poses many risks to sharemarkets, given it will lead to further rate rises, and the ASX 200 lost 0.4%.
The Information Technology sector was among the hardest hit given the impact increased rates will have on technology stock valuations. Buy-now-pay-later providers lost ground; Zip shed 5.7% and Block dropped 0.4%, while accounting software provider, Xero, shed 0.3%.
Sector giant, CSL, weighed on the Health Care sector, as it conceded 1.3% and the sector dropped 1.4%. Ramsay Health Care and Sonic Healthcare both slipped 0.6%, while Australian Clinical Labs closed the session relatively flat.
The price of iron ore was largely unchanged and appears to have stabilised at approximately US$145 per tonne. As a result, the major miners were relatively flat; Rio Tinto added 0.5% and BHP eked out a less than 0.1% gain, while Fortescue Metals dropped 0.1%.
The Australian futures market points to a relatively flat open today.
Overseas Markets
European sharemarkets closed mostly lower overnight, as gains in the Materials and Energy sectors were overshadowed by losses from the Financials sector. The major banks weighed on the indices; Barclays lost 1.0% and ING Groep shed 1.2%. By the close of trade, the UK’s FTSE 100 dropped 0.6% and the STOXX Europe 600 closed down 0.4%, while the German DAX lost 0.5%.
US sharemarkets also lost ground on Tuesday, as the Information Technology sector was mixed. Cybersecurity providers Fortinet and CrowdStrike Holdings enjoyed gains, up 0.6% and 3.2% respectively. However, NVIDIA Corporation (-1.9%), Microsoft (-1.1%) and Amazon (0.2%) weighed on the index. By the close of trade, the Dow Jones, NASDAQ and S&P 500 all closed the session 0.3% lower.
CNIS Perspective
US headline inflation hit 8.5% in March, a monthly rise of 1.2% after a surge in energy and food prices, which maintains pressure on the US Federal Reserve to take aggressive action.
When volatile items such as food and energy are removed from the calculation, the ‘core’ CPI measure only advanced 0.3% in March.
Russia’s invasion of Ukraine was cited as fuelling energy and food costs, while new COVID-19 lockdowns in China have impacted the supply chain.
Shipping costs have been a serious concern over the past two years, while supply chains were under pressure with lockdowns.
The Baltic Dry Index, a leading indicator of dry bulk shipping costs, has decreased from its 5,650-point peak in early October, down to 2,031 points today, 100 points less than it was 12 months prior.
When COVID-19 lockdowns subside in China and demand resumes for shipping, it will be important to watch how the cost of shipping reacts and how that will contribute to the broader inflationary pressures that we are already experiencing.
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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