Pre-Open Data
Key Data for the Week
Australian Market
The Australian sharemarket eked out a 0.1% improvement on Friday to remain at a 13-month high, as the local index managed to hold onto gains accrued in the previous three sessions. Sector performance was mixed, as gains by REITs, Consumer Discretionary, Materials and Telecommunications names offset weakness in Energy, Utilities and Consumer Staples stocks.
Energy stocks led the losses; Woodside Petroleum dropped 1.1% and Oil Search gave up 1.0%, while Origin Energy tumbled 8.9% after the company lowered its FY21 guidance for Energy Markets Earnings EBITDA.
Mining heavyweights BHP and Rio Tinto rose 0.5% and 1.0% respectively to lead Materials stocks higher, while Newcrest Mining added 3.2%. Financials were weighed down by the big four banks which closed mostly weaker; Commonwealth Bank bucked the trend to gain 0.1%.
The Australian futures market points to a 0.52% rise today, being driven by stronger overseas markets.
Overseas Markets
European sharemarkets lifted on Friday, to mark their seventh consecutive week of gains, boosted by optimism towards a quick global recovery following strong US and Chinese economic data. Auto stocks climbed 2.1%, after data showed European Union new car registrations soared 87.3% in March. Daimler rose 2.7%, after the German auto giant announced strong quarterly earnings, underpinned by solid Chinese demand, while L’Oreal slipped 1.8%, following disappointing results from the company’s consumer products division. By the close of trade, the UK FTSE 100 rose 0.5%, while the German DAX and STOXX Europe 600 strengthened 1.3% and 0.9% respectively, as both indexes closed at record highs.
US sharemarkets also climbed to all-time highs on Friday. Morgan Stanley slid 2.8% despite stronger-than-expected earnings, after the bank disclosed an almost US$1 billion loss from the collapse of private fund Archegos Capital. The NASDAQ lifted 0.1%, while the Dow Jones and the S&P 500 both closed at record highs, following gains of 0.5% and 0.4% respectively.
CNIS Perspective
The world appears mesmerised by cryptocurrencies with Bitcoin doubling in price this year after tripling in 2020. There is a second crypto tale unfolding that most people have noticed less, central bank experiments. The Chinese Government’s experiment is well under way with a central bank digital currency (CBDC), a digital yuan. China would be the first country to create a virtual currency, but many are considering following suit.
Bank for International Settlements held an ‘innovation’ conference last month, at which Federal Reserve Chair Jay Powell explained that Fed officials are working with the Massachusetts Institute of Technology to explore the feasibility of a dollar-based central bank digital currency.
Such central bank digital currencies would be overseen by a central government authority, removing the element of anonymity that is fundamental to the decentralised, blockchain-ledger of popularised cryptocurrencies like Bitcoin or Ethereum. The benefits of government oversight of these new digital assets are many: greater prevention of fraud or crime, enable instantaneous international transactions, reduce transaction costs, permit greater financial inclusion and aid the provision of direct fiscal stimulus to individual citizens.
As a totalitarian state, China has not needed to ponder too much on these privacy issues that will cause considerable debate elsewhere. With its first-mover advantage, greater acceptance as a global reserve currency and ballooning fiscal deficits in the US, will hasten the acceptance of China’s Renminbi as the main rival to the US currency.
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