Pre-Open Data
Key Data for the Week
Australian Market
The Australian sharemarket finished the session relatively flat yesterday. The defensive Consumer Staples and Utilities sectors were the strongest performers, both up 1.2%, followed by the Health Care sector, which rose 1.1%. However, these gains were dampened by losses in the Materials sector, which fell 1.2%.
Gains across all the major banks boosted the Financials sector, which closed up 0.7%. NAB was the top performer, up 1.3%, followed by Commonwealth Bank, which rose 1.2%, while Westpac and ANZ added 0.8% and 0.5% respectively. Insurers were mixed; NIB gained 2.8%, however, Suncorp and QBE Insurance fell 0.9% and 1.8% respectively.
The Materials sector weakened on fears of slowing demand of commodities, as China began reimposing COVID-19 lockdowns in three cities in an attempt to curb a recent outbreak of the virus. Mining heavyweight BHP fell 1.4%, Mineral Resources shed 2.6% and South32 gave up 2.2%. However, Rio Tinto and Fortescue Metals added 0.1% and 0.2% respectively.
In company news, buy-now-pay-later providers Zip Co (6.0%) and Sezzle (-38.6%) agreed to terminate their proposed merger agreement due to current macroeconomic and market conditions. As a result, Zip Co will pay a US$11 million fee to Sezzle to cover the costs associated with the transaction.
The Australian futures market points to a flat open today.
Overseas Markets
European sharemarkets advanced overnight. Luxury goods producers contributed gains; LVMH Moët Hennessy Louis Vuitton added 1.1% and Christian Dior rose 1.6%, while Hermès gained 3.0%. Banking stocks closed higher; Credit Suisse lifted 1.7% and Lloyds Bank gained 1.0%, while Barclays Bank and Deutsche Bank rose 0.8% and 0.5% respectively. Furthermore, aeroplane manufacturer Airbus closed 3.9% higher.
By the close of trade, the UK FTSE 100 added 0.2% and the STOXX Europe 600 rose 0.5%, while the German DAX closed up 0.6%.
US sharemarkets eased on Tuesday, with all sectors weaker, as investors awaited US inflation data to be released tonight. The Energy sector was the weakest performer, down 2.0%; Chevron fell 1.8% and ExxonMobil slid 1.3%. Declines in technology majors weighed on the Information Technology sector, which fell 1.3%. Fortinet fell 4.3% and Microsoft shed 4.1%, while Alphabet gave up 1.4% and NVIDA lost 0.5%.
By the close of trade, the Dow Jones slipped 0.6% and the S&P 500 lost 0.9%, while the NASDAQ closed down 1.0%.
CNIS Perspective
Yesterday’s perspective about the Chinese Government allowing local governments to sell bonds and accelerate infrastructure spending raises an interesting observation about economic stimulus in China versus western economies.
Stimulus during COVID lockdowns in western economies saw governments transfer cash to those individuals and businesses that qualified, so they had money in their pockets to spend and therefore keep the economy ticking over. In Australia, Job Keeper and Job Seeker did just that, along with stimulus schemes.
In China, there is no mechanism for the government to put such welfare payments into the pockets of their population.
Instead, they can however, build infrastructure that creates jobs and therefore a pay packet for workers.
As China endeavours to break out of its zero-COVID policy lockdowns, infrastructure spending, as highlighted yesterday, will no doubt be a driver for our Materials sector.
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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