Pre-Open Data
Key Data for the Week
- Wednesday – EUR – Industrial Production rose to 0.1% in March, from -1.2% in April.
- Wednesday – UK – Gross Domestic Product declined 1.5% in the March quarter, down 6.1% year on year.
- Thursday – AUS – Consumer Inflation Expectation
- Thursday – US – Producer Price Index
Australian Market
The Australian sharemarket eased 0.7% yesterday. Losses were broad based, with Utilities the weakest sector, down 2.2%, followed by Energy and Industrials.
All major banks except Commonwealth Bank were weaker. Westpac fell 1.2%, NAB lost 1.0% and ANZ slipped 0.6%, while Commonwealth Bank gained 1.1% after the company reported that cash profit has improved $2.4 billion in the third quarter of FY2021. Insurers also closed the session lower; Insurance Australia Group lost 2.2% and NIB fell 1.4%, while QBE Insurance gave up 0.8%.
The Materials sector posted a 0.7% loss, as the iron ore price slipped from its recent record high. BHP and Rio Tinto closed down 0.5% and 0.4% respectively, however, Fortescue Metals bucked the trend to gain 1.4%. Goldminers underperformed; Evolution Mining shed 1.4% and Northern Star fell 1.3%.
Industrials fell 1.6%, weighed down by Qantas, which gave up 3.4% after the company pushed back its expected restart date for international travel from October 2021 to the end of 2021. This follows the release of the Federal Budget, which noted borders may remain closed until mid-2022.
The Australian futures market points to a 0.40% fall today, driven lower by weaker overseas markets.
Overseas Markets
European sharemarkets advanced overnight, with the Energy sector the strongest performer as oil prices reached two-year highs. Royal Dutch Shell gained 3.3%, while BP added 3.5%. Financials were also higher; Deutsche Bank added 2.4% and HSBC lifted 0.9%, while Barclays rose 0.8%.
By the close of trade, the German DAX gained 0.2% and the STOXX Europe 600 added 0.3%, while the UK FTSE 100 lifted 0.8%.
US sharemarkets posted losses on Wednesday, as the release of higher than expected inflation data led to a sharp decline in the Information Technology sector. Fortinet lost 4.6% and Alphabet fell 3.0%, while Microsoft and Apple gave up 2.9% and 2.5% respectively. Financial services stocks were also weaker; PagSeguro Digital shed 5.2% and PayPal eased 3.5%, while MasterCard and Visa fell 3.0% and 2.2% respectively.
Energy was the only sector to improve; ExxonMobil rose 0.5% and Chevron added 0.6%, while Occidental Petroleum gained 2.5%.
By the close of trade, the Dow Jones eased 2.0% and the S&P 500 gave up 2.1%, while the NASDAQ shed 2.7%.
CNIS Perspective
Census data released on Tuesday highlighted China's population is growing at its slowest pace in decades, with a plunge in the birth rate offset by an aging workforce, making it a challenging prospect for China's economic growth outlook.
China’s population has now reached 1.41 billion, however, only 12 million babies were born in China last year, the lowest number of births since 1961 (during a famine), and the 4th year in a row that births have fallen. People over the age of 65 now account for 13.5% of the population (up from 8.9% in 2010).
China's rise to the second largest economy in the world has been underpinned by decades of growth in an expanding workforce of young people, working for low wages in its factories to fuel its economic growth. An aging and slowly growing population threatens to derail this expansion.
Age-related issues are an economic problem in developed countries, putting pressure on hospitals, infrastructure and pension systems.
It will be interesting to see how China handles this problem.
Should you wish to discuss this or any other investment related matter, please contact your Investment Services 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.
