Pre-Open Data
Key Data for the Week
- Tuesday – AUS – RBA Board Meeting Minutes
- Tuesday – EUR – Gross Domestic Product
- Tuesday – UK – ILO Unemployment rate
Australian Market
The Australian sharemarket advanced 0.4% on Monday, despite weakness early in the session. Sector performance was mixed, with the Health Care sector the main laggard, down 1.4%.
The Energy sector rallied as oil prices rose to seven-year highs after reports Russia may invade Ukraine within days. Santos gained 4.0% and Woodside Petroleum added 3.6%, while Ampol lifted 1.6%. Beach Energy climbed 9.4% after the company reported a 65.8% lift in profit and a 9.8% jump in revenue.
Gold miners also outperformed yesterday, as the precious metal traded near its highest level since November. Newcrest Mining closed up 4.3%, while Northern Star Resources and Evolution Mining gained 5.9% and 7.9% respectively. However, mining heavyweights were weaker; BHP slid 1.1% and Rio Tinto fell 0.6%, while Fortescue Metals lost 0.4%.
The Financials sector finished the session up 1.5%, as all major banks closed higher; Westpac led the gains, up 4.8%, followed by NAB, which added 2.0%, while Commonwealth Bank and ANZ rose 1.5% and 1.4% respectively. Insurers were mixed; Insurance Australia Group fell 0.4% and NIB gave up 0.2%, while QBE Insurance added 0.6%.
In company news, JB Hi-Fi jumped 5.4% after the retailer announced a share buyback of up to $250 million. The company also reported a 9.4% decline in net profit, however, assured investor this was due to COVID-19 lockdowns and significant sales in the previous period.
The Australian futures market points to a 0.90% fall today, driven by weaker overseas markets.
Overseas Markets
European sharemarkets weakened overnight as investors remained cautious of the heightened geopolitical tensions between Russia and Ukraine. Banking stocks led the losses; Barclays Bank gave up 5.0% and Lloyds Bank fell 3.8%, while Deutsche Bank and HSBC lost 3.5% and 1.5% respectively.
Travel stocks were also lower; International Airlines Group closed down 5.6% and German airline Lufthansa fell 3.3%, while easyJet gave up 1.9%. By the close of trade, the German DAX slid 2.0% and the STOXX Europe 600 lost 1.8%, while the UK FTSE 100 closed 1.7% lower.
US sharemarkets also eased on Monday. The Energy sector was the weakest performer, down 2.2%; ExxonMobil fell 1.5%, while Chevron shed 1.6%. The Health Care sector was also lower; Bristol-Myers Squibb slipped 0.1% and Danaher Corporation fell 0.4%, while UnitedHealth Group and Johnson & Johnson gave up 0.8% and 1.3% respectively.
Technology stocks were mostly higher; Netflix and NVIDIA both added 1.3%, while Alphabet and Apple lifted 0.9% and 0.1% respectively. However, Meta Platforms fell 0.8% and Microsoft slipped less than 0.1%. By the close of trade, the Dow Jones closed down 0.5% and the S&P 500 eased 0.4%, while the NASDAQ finished the session flat.
CNIS Perspective
The tight labour market globally and growing levels of inflation are starting to have their effect on wage prices, but recent data shows it is some way off adding fuel to the inflation fire.
The UK is a good case study, as it is advanced in its decision to combat inflation compared to most developed countries.
A near 30-year high inflation rate in December pressured the Bank of England to raise rates twice in the last two months, to 0.5%, with expectations for two further rises by May.
Despite the Bank of England’s forecast of an average 5.75% inflation rate over 2022 (and peak of 7.25%), a survey overnight showed median annual pay growth expectations in 2022 rose to just 3.0%.
While UK wages growth now sits at a nine year high, real wages are continuing to fall against this backdrop of high inflation.
There was a major question mark at the back end of last year over if, or when, wages would be pressured higher in this environment. The truth is, wages are going to need to increase to combat inflation currently in the economy, but we still seem some way off wages adding their own pressure to global inflation rates.
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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