Pre-Open Data
Key Data for the Week
Key economic data released this week:
- Wednesday – UK – Consumer Price Index slipped 0.2% in January, however exceeded expectations.
- Wednesday – US – Retail Sales jumped 5.3% in January.
- Thursday – AUS – Unemployment Rate
- Thursday – US – Building Permits
Australian Market
The Australian sharemarket fell 0.5% yesterday, to close lower for the first time this week. The Consumer Staples sector was the weakest performer as Coles and Woolworths lost 5.4% and 4.6% respectively. Coles reported a profit rise of 14.5% and increased its dividend by 10%, however, warned of potentially lower profits in 2HFY21. Woolworths is set to release its earnings results next week.
Westpac lifted 4.5% to outperform the Financials sector after the bank reported cash profit of $1.97 billion. Commonwealth Bank underperformed, down 1.9%, while ANZ and NAB added 1.4% and 0.2% respectively.
The Materials sector was the best performer on the local market. Rio Tinto jumped 3.6% prior to the company releasing profits after market. The company announced a $5.17 dividend, sales revenue growth of 3% and net earnings increase of 22% due to higher iron ore prices. BHP and Fortescue Metals added 3.4% and 3.0% respectively.
Super Retail Group rose 2.0% after the company announced first half profit increased 201% and like for like sales for the first six weeks of 2021 were up 30.5%. The outdoor retailer saw growth in sales across all businesses and announced a $0.33 fully franked dividend.
The Australian futures market points to a 0.23% fall today, driven by weaker overseas markets overnight.
Overseas Markets
European sharemarkets were weaker on Wednesday, as a possible spike in near term inflation and rising bond yields caused risk-off sales in shares. By the close of trade, the broad based STOXX Europe 600 ended down 0.7%.
US sharemarkets were mixed overnight, with the Technology sector the worst performer. The lift in January’s retail sales figures released yesterday suggests consumers spent most of the government stimulus cheques and were more confident about 2021. Amazon lifted 1.2%, while Shopify slipped 3.3% to ease from recent highs. Garmin fell 2.2% despite the company reporting Q4 revenue of US$1.4 billion, Earnings Per Share above expectations and a 10% increase in its quarterly dividend to US$0.67. Telecommunications outperformed with AT&T up 2.1%.
By the close of trade, the Dow Jones rose 0.3%, the NASDAQ fell 0.6% and the S&P 500 closed flat.
CNIS Perspective
We have recently highlighted the importance of consumer spending on the success of economic growth and prosperity of the global economy. It’s also interesting to note the effect COVID-19 is having on consumer spending habits.
While COVID-19 resulted in a tightening of consumer purse-strings last year, not all sectors have been affected in the same way and some sectors may be setting a trend to a ‘new normal’.
The graph below shows the sharp decline in US retail sales at bars and restaurants (black line), compared to the spike in US retail sales (red line) at food and beverage stores. Social distancing has dramatically switched consumer demand away from restaurants and bars, almost dollar for dollar (shown by the almost vertical lines in March 2020), to food and beverage stores.
Should you wish to discuss this or any other investment related matter, please contact your Investment Services Team on (02) 4928 8500.
Disclaimer
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