Pre-Open Data
Key Data for the Week
- Thursday – AUS – Unemployment Rate remained around record lows at 4.2%, however, hours worked plunged 8.8% in January.
- Thursday – US – Retail Sales jumped 3.8% in January.
- Friday – US – Existing Home Sales
Australian Market
The Australian sharemarket edged higher, up 0.2%, despite escalated concerns around inflation, the likelihood of sooner than expected interest rate hikes and Russia-Ukraine tensions. The labour force report triggered a mid-session rally, as data aligned with expectations, which provided some macroeconomic certainty.
The Heath Care sector led the local sharemarket, ahead 3.0%, pushed higher again by CSL (5.1%), as investors digested its recent earnings report. The Energy (0.9%) and Materials (0.6%) sectors also performed well, driven by an increase in the price of oil and iron ore, led by Woodside Petroleum (4.1%) and BHP (1.4%).
On the other hand, the Telecommunications Services (-3.0%) sector was the primary detractor, dragged down by Telstra (-4.2%). The Telecom giant suffered after it reported that statutory earnings declined 14.8%, largely attributable to one-off NBN receipts, while the company’s underlying EBITA was up 5.1%.
Wesfarmers was a key detractor in the session, down 7.5%, after it reported a 12.7% fall in first-half net profit. The company cited supply chain issues and extensive store closures due to COVID-19, as the reason for decreased revenue and profit across its major brands.
The Financials (0.3%) sector firmed, as all four major banks advanced, led by Westpac (0.9%), followed by NAB (0.7%), ANZ (0.4%) and Commonwealth Bank (0.2%).
The Australian futures market points to a 1.15% decrease today.
Overseas Markets
European sharemarkets extended losses further on Thursday, following weakness in banking and energy stocks. Oil majors BP (-1.5%) and Shell (-2.7%) declined, as the price of oil weakened overnight and geopolitical tensions in Eastern Europe rose. Meanwhile Barclays (-1.7%) and Deutsche Bank (-1.4%) slipped, after two-year government bond yields fell sharply. By the close of trade, the UK FTSE 100 fell 0.9%, while the STOXX Europe 600 and German DAX both lost 0.7%.
US sharemarkets fell on Thursday, as investor anxiety led to a rotation from stocks to safe haven assets like bonds and gold. This followed news that Russian-backed rebels and Ukrainian forces exchanged fire, which led to US President Biden’s statement that there was an increased likelihood that Russia would invade Ukraine. Furthermore, accelerated US retail sales data did not help inflation worries. Most sectors closed in the red, with Consumer Staples (0.9%) being a standout performer. The Information Technology (-3.1%) sector was the weakest, dragged lower by losses from Microsoft (-2.9%), NVIDIA (-7.6%), Apple (-2.1%) and Meta Platforms (-4.1%). By the close of trade, the S&P 500 fell 2.1%, while the NASDAQ and Dow Jones gave up 2.9% and 1.8% respectively.
CNIS Perspective
January’s labour force data contained some conflicting detail about Australia’s current employment.
The Omicron variant saw the unemployment rate remain steady at 4.2%, however, hours worked fell 8.8%, which is the second largest fall on record.
This would suggest employers and employees have negotiated working less hours to keep jobs, rather than adding to the unemployed.
In addition to working less hours, isolation from Omicron infection, or being deemed a close contact, also resulted in a much larger than usual number of workers taking annual leave or sick leave in January.
However, countering the less hours worked and more leave, was an increase in the participation rate, with the rate rising to 66.2%, just shy of the March 2021 record of 66.3%.
Of note, was the participation rate of women, which rose to a record high of 62.1%.
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