Pre-Open Data
Key Data for the Week
- Tuesday – AUS – RBA Board Meeting Minutes reiterated recent messages, and forecasts point to an upbeat view of the economic outlook.
- Tuesday – EUR – Gross Domestic Product grew 0.3% in the December quarter.
- Wednesday – US – Retail Sales
- Wednesday – UK – Consumer Price Index
Australian Market
The Australian sharemarket closed 0.5% lower yesterday, as it followed a weak lead from the US that was caused by increased tensions between Russia and Ukraine.
A fall in the price of iron ore heavily weakened the Materials sector. Mineral Resources was among the hardest hit, as it conceded 5.3%, while Fortescue Metals dropped 5.1%. Rio Tinto lost 2.3%, while BHP lost ground throughout the day to shed only 0.3% after the company released their half-year earnings report. The price of gold continued to increase as a result of the inflation reading from the US last week; Northern Star Resources added 0.7%.
The Financials sector closed the session 0.9% lower. Westpac led the losses, down 3.4%, while ANZ dropped 1.4%. Commonwealth Bank recovered from a poor start in the day to close down 0.6%, while NAB closed the session relatively flat.
The Energy sector was impacted by a decrease in the price of oil on Tuesday. Woodside Petroleum lost 2.5%, while Santos and Beach Energy fell 4.2% and 10.5% respectively.
The Australian futures market points to a 0.91% gain today, driven by stronger overseas markets.
Overseas Markets
European sharemarkets finished higher yesterday, as Russia withdrew some troops from Ukraine’s border, which eased tensions. The rebound was led by chemicals, industrials, health care and automaker stocks. By the close of trade, the STOXX Europe 600 added 1.3% and the German DAX lifted 2.0%, while the UK FTSE 100 was up 1.0%.
US sharemarkets also rebounded on Tuesday. Semiconductor producers increased; ASML added 4.5% and NVIDIA jumped 9.2%, while electric vehicle charging stations manufacturer, ChargePoint Holdings, soared 14.0%. By the close of trade, the Dow Jones added 1.2%, while the S&P 500 and NASDAQ lifted 1.6% and 2.5% respectively.
CNIS Perspective
The current Russia – Ukraine conflict is prominent in domestic news headlines at the moment, and justifiably more so in Europe.
Barring lengthy discussion into geo-politics between the two countries and their relationship with NATO, a quick look at the petrol bowser confirms this is causing inflationary upheaval in energy markets.
Russia currently stands as the leading energy supplier in Europe, providing 41% of Europe’s natural gas and 27% of Europe’s crude oil.
On top of this dependence formed by many European nations, Ukraine is the proprietor of several pipelines which connect Russia to Europe, which if damaged during conflict, would have significant implications throughout several European countries in the short to medium term.
Having said that, the amount of natural gas transported through Ukraine has fallen over the years, lessening the country’s importance.
Once again, we are seeing supply side factors forcing prices up. Surrounding European countries will obviously be the hardest hit, while Australia will feel inflationary pressure from higher energy prices. However, the extent of any disruption should be limited by the ability to source supply elsewhere.
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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