Pre-Open Data
Key Data for the Week
- Tuesday – AUS – ABS House Prices rose 5.4% in the March quarter, following a 3.0% gain in the three months to December.
- Tuesday – US – Retail Sales fell 1.3% in May, after a 0.9% gain in April.
- Wednesday – UK – Consumer Price Index
- Wednesday – US – FOMC Policy Decision
Australian Market
The Australian sharemarket closed 0.9% higher on Tuesday, aided by a broad based rally. The Health Care sector was the best performer on the market, up 2.0%, with gains led by market giant, CSL, which added 1.7%. Sonic Healthcare and Ramsay Health Care also improved 2.4% and 1.0% respectively, while Cochlear lifted 1.9%.
The Information Technology sector lifted 1.6%, strengthened by Afterpay which added 2.1%. Gains were also seen in accounting software provider, Xero, which lifted 2.9%.
The Financials sector also closed higher as all of the big four banks lifted in the day’s trade; Commonwealth Bank hit a new record high and added 2.1%, ANZ lifted 1.5%, while Westpac and NAB gained 1.0% and 0.8% respectively.
The major miners were all higher yesterday as commodity prices continued to surge. Rio Tinto added 1.2%, while BHP lifted 0.6%, and Fortescue Metals gained 0.5%. The price of gold fell, resulting in Northern Star Resources shedding 2.0% and Evolution Mining dropping 1.4%.
The Australian futures market points to a 0.16% decline today.
Overseas Markets
European sharemarkets extended gains for an eighth straight session overnight as optimism returns over the economic and COVID recovery. The Financial sector climbed as ING Groep added 0.7% and Deutsche Bank lifted 0.2%.
Energy shares also outperformed as the price of Brent Crude Oil sits comfortably above US$70 per barrel. As a result, BP gained 1.2%, while Royal Dutch Shell added 1.5%. By the close of trade, the pan-European STOXX 600 index was up 0.1%.
US sharemarkets closed lower on Tuesday, as some inflationary pressures returned, with investors turning their attention towards the Federal Reserve’s latest policy meeting. The largest gains were seen in the Energy sector, which lifted 2.1% as a result of the increased oil prices, with Exxon Mobil the biggest contributor, up 3.6%. There were also gains in the Utilities sector, as Boeing rose 0.6% after the US and the European Union signed an agreement that stated there will be a truce over aircraft subsidies between the company and Airbus.
By the close of the session, the Dow Jones lost 0.3%, the S&P 500 shed 0.2% and the NASDAQ dropped 0.7%.
CNIS Perspective
The US CPI data released last Friday was stronger than expected, but financial markets took it in their stride.
A number of factors have been cited for the subdued reaction, including the rather concentrated price growth in areas such as used cars, apparel and airfares.
Nevertheless, it was still surprising to see bond prices rise and yields fall after such strong data.
One factor somewhat overlooked in driving bond prices higher is the supply and demand for US treasury bonds, where the supply of bonds is now about a fifth of that issued this time last year.
This has effectively engineered a strong bid in the treasury market, which has forced the bond price up.
This may be clouding inflationary signals.
However, the underlying US economy remains strong and the debate about inflation is still very much alive.
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.
