Pre-Open Data
Key Data for the Week
- Thursday – AUS – Unemployment Rate fell to 4.0% in February, down from 4.2% in January.
- Thursday – UK – BoE Policy Meeting – The BoE raised rates by 25 basis points to 0.75%.
- Friday – EUR – Trade Balance
Australian Market
The Australian sharemarket advanced 1.1% on Thursday to follow the US sharemarket’s gains in the previous session. All sectors except Consumer Staples and Utilities were higher, with the Information Technology the strongest performer, up 3.5%.
Mining heavyweights were boosted by a stronger iron ore price; Fortescue Metals jumped 4.4%, while Rio Tinto and BHP gained 1.6% and 1.1% respectively. Gold miners were mixed; Newcrest Mining added 1.0%, while Northern Star Resources slipped 0.2% and Evolution Mining fell 0.5%.
Most of the major banks closed higher; Commonwealth Bank, NAB and ANZ all lifted 1.3%, while Westpac lost less than 0.1%. Insurers were mixed; QBE Insurance added 0.5%, while Suncorp gave up 0.3%.
Strong gains from buy-now-pay-later providers lifted the Information Technology sector; Zip Co closed up 10.1% and Afterpay owner Block rallied 10.2%, while Sezzle jumped 12.1%. Accounting software provider Xero added 3.0%, while artificial intelligence company Appen eked out a 0.1% gain.
In company news, the New Zealand Commerce Commission approved Ampol’s proposal to purchase fuel distributor Z Energy. However, the regulator ruled Ampol must divest its New Zealand business Gull to buy Z Energy, with Ampol announcing plans to sell Gull for $475 million to Allegro. Ampol closed up 3.6%, while Z Energy added 0.9%.
The Australian futures market points to a 0.51% rise today.
Overseas Markets
European sharemarkets were mixed overnight as Russia-Ukraine peace talks continued and the Bank of England raised interest rates as anticipated. Energy stocks led the gains as the oil price rose; BP and Royal Dutch Shell both lifted 2.1%. Renewable energy stocks were mixed; Vestas Wind Systems added 2.8% and Siemens Gamesa Renewable Energy slipped 2.0%.
By the close of trade, the German DAX gave up 0.4%, while the STOXX Europe 600 and UK FTSE 100 lifted 0.5% and 1.3% respectively.
US sharemarkets closed higher on Thursday, lifted by the Energy sector. Occidental Petroleum rallied 9.5% and ConocoPhillips gained 4.2%, while ExxonMobil and Chevron added 2.7% and 1.7% respectively.
The Information Technology sector also enjoyed gains, boosted by cybersecurity stocks; CrowdStrike jumped 7.6% and SentinelOne rose 7.5%, while Fortinet added 2.0%. Technology heavyweights advanced; Alphabet and Apple both closed up 0.7%, while Microsoft rose 0.3%. Health Care was amongst the top performing sectors; UnitedHealth Group lifted 1.8% and Johnson & Johnson gained 1.3%, while Danaher Corporation and Bristol-Myers Squibb closed up 1.3% and 1.2% respectively.
By the close of trade, the Dow Jones and S&P 500 both advanced 1.2%, while the NASDAQ rose 1.3%.
CNIS Perspective
With energy prices having spiked to their highest level since 2008 earlier this month, the higher and more volatile prices are a catalyst for both individual and global efforts to decarbonise energy grids, and to think more about renewable energy and electric vehicles.
The price of crude oil spiked as high as ~US$130 per barrel on March 7 and currently trades at ~US$104 a barrel, which is still at elevated levels. Only a few months ago, oil was trading in the mid US$60 a barrel. If oil prices are to remain elevated, or move significantly higher again, this could lead to a rush to drill more oil and in turn flood the supply side to bring prices back down.
However, ramping up fossil fuel production is counter to climate change targets.
Higher prices at the pump may motivate consumers to think about switching from conventional vehicles to hybrid or all-electric vehicles, even if these higher oil prices are short lived.
Energy prices alone are not going to be a tipping point that gets society to embrace cleaner energy sources, government intervention and widespread education are also critical.
Should you wish to discuss this or any other investment related matter, please contact your Wealth Management 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.
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