Pre-Open Data
Key Data for the Week
- Thursday – EUR – Consumer Price Index remains unchanged at 2.0% year-on-year in May.
- Thursday – AUS – Unemployment Rate fell 0.4 percentage points to 5.1% in May, the lowest rate since December 2019.
- Friday – UK – Industrial Production
Australian Market
The Australian sharemarket eased 0.4% yesterday in a mixed session of trade. The Information Technology sector was the strongest performer, up 1.3%, followed by Financials, which added 0.8%.
The Consumer Staples sector was among the weakest performers, down 1.5%. Coles Group lost 4.5% following the supermarket giant’s investor day, where they stated plans to increase spending to $1.4 billion in FY2022 to drive earnings growth. Woolworths gave up 0.8% and Costa Group slipped 1.8%, while Bega Cheese bucked the trend to gain 1.5%.
Strong gains among the major banks lifted the Financials sector; Westpac gained 1.5% and ANZ rose 1.1%, while Commonwealth Bank and NAB added 1.0% and 0.6% respectively. Fund managers also outperformed; Australian Ethical Investment improved 0.6%, while Magellan Financial Group lifted 0.4%.
Mining heavyweights weighed on the Materials sector; Fortescue Metals gave up 1.5% and BHP lost 1.4%, while Rio Tinto slipped 1.2%. Whitehaven Coal shed 11.5% after the miner downgraded its coal production guidance for FY21. Gold miners were also weaker; Northern Star Resources slid 7.6% and Evolution Mining lost 4.7%, while Newcrest Mining eased 2.5%.
The Australian futures market points to a 0.52% rise today.
Overseas Markets
European sharemarkets were mixed overnight. Mining stocks were the weakest performers, following a fall in commodity prices; Anglo-American shed 3.4% and BHP gave up 3.1%, while Rio Tinto lost 2.3%. The Financials sector was the top performer; Barclays added 1.0% and Lloyds Bank rose 0.6%, while HSBC and Deutsche Bank gained 0.5% and 0.2% respectively. By the close of trade, the UK FTSE 100 fell 0.4% and the STOXX Europe 600 slipped 0.1% from record highs, while the German DAX added 0.1%.
US sharemarkets were also mixed on Thursday. The Information Technology sector advanced 1.2%; NVIDIA climbed 4.8% and Spotify added 1.8%, while Facebook and Microsoft gained 1.6% and 1.4% respectively. Consumer Discretionary stocks also enjoyed strong gains; Shopify jumped 6.1%, while Amazon lifted 2.2%. Financials services stocks improved; PayPal closed up 3.5% and PagSeguro Digital rose 2.5%, while Visa and MasterCard lifted 1.1% and 1.0% respectively.
By the close of trade, the Dow Jones slipped 0.6% and the NASDAQ gained 0.9%, while the S&P 500 finished the session relatively flat.
CNIS Perspective
Australia’s unemployment rate continues to positively surprise economists and investors. Data released yesterday shows job growth surged in May, with 115,000 jobs added. This takes the total number of jobs added to the economy to one million over the past 12 months.
As a result, the unemployment rate has dropped to 5.1%, down from 5.5% in April. To put this into perspective, economists were forecasting the unemployment rate to reach 5.0% at the end of 2021.
The economic recovery has been led by consumer spending. It is now also being supported by an expansion in business investment, which is helping to drive job growth.
Given the strong labour market, it is possible we are reaching ‘full employment’ (a target unemployment rate of between 4-5%) sooner than anticipated. This could also lead to higher wages growth sooner than anticipated and alter the RBA’s view on interest rates.
The chances of a rate hike cycle starting in 2023, rather than 2024, have now grown considerably.
Should you wish to discuss this or any other investment related matter, please contact your Investment Services Team on (02) 4928 8500.
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