Pre-Open Data
Key Data for the Week
Key economic data released this week:
- Thursday – EUR – Markit Manufacturing PMI was unchanged at 53.7 in September.
- Thursday – EUR – Unemployment Rate rose to 8.1% in September, the fifth consecutive monthly rise. Further rises are expected as wage support programs expire, and increased coronavirus cases continue.
- Thursday – US – Markit Manufacturing PMI edged down 0.6 to 55.4 for September.
- Friday – AUS – Retail Sales
- Friday – US – Unemployment Rate
Australian Market
The Australian sharemarket rose 1.0% yesterday, as all sectors closed higher for the first session of October. The REITs sector was the best performer, led higher by Charter Hall Retail, up 4.2%, while Stockland Corporation and Cromwell Group added 3.7% and 1.2% respectively.
A rebound in the price of iron ore led the Materials sector higher; Fortescue Metals rallied 2.3%, BHP added 1.9% and Rio Tinto rose 1.2%.
The big four banks all rose between 0.5% and 1.0% to help lift the Financials sector. Commonwealth Bank reported its August loan deferrals were down 12,000 to 170,000 in August, with the total value deferred now $59 billion. APRA's latest statistics released yesterday showed $229 billion of loans have been deferred, with $160 billion in housing loans.
James Hardie Industries and Atlas Arteria Group also outperformed, up 2.9% and 2.1% respectively.
The Australian futures market points to a 0.46% fall today.
Overseas Markets
European sharemarkets were mostly higher on Thursday, with the broad based STOXX Europe 600 up 0.2%. German real estate company Vonovia added 1.3%, while Swedish retailer H&M climbed 6.1% after it beat third-quarter profit forecasts and announced plans to close hundreds of stores next year. A fall in the price of oil led Energy stocks lower; Royal Dutch Shell, BP and Total all fell between 2.4% and 3.5%.
US sharemarkets edged higher overnight, led by consumer and technology stocks. Spotify added 3.1% and Amazon rose 2.3%, while Facebook, Alphabet and Microsoft all gained between 1.0% and 1.8%. Financial services companies were mostly stronger; Visa and MasterCard lifted 1.7% and 1.6% respectively, while PayPal slipped 0.1%.
By the close of trade, the Dow Jones added 0.1%, the S&P 500 rose 0.5% and the NASDAQ gained 1.4%.
CNIS Perspective
A decade ago, global house prices fell by an average of 10% during the GFC, wiping trillions of dollars off the world’s largest asset class. With COVID-19 pushing the world economy into its deepest downturn since the 1930’s Great Depression, real-estate investors and homeowners prepared themselves for the worst.
To date, it would appear that this pessimism has been misplaced. House prices have picked up in most middle and high-income countries over the last quarter. In G7 countries, the annual growth rate rose 5% and in some countries such as South Korea and Germany, the market is up over a startling 10%.
It is clear that monetary policy has supported this, with central banks across the world having cut interest rates by 2% on average this year. Additionally, fiscal policy measures such as handouts, subsidies, furlough schemes and welfare will have likely further supported house prices.
There is also a third factor that has emerged, which is a significant change in consumer preferences for larger and/or nicer homes. The working from home phenomenon has led to an increase in space requirements and an increased percentage of income being allocated to housing costs.
As we move into 2021 it is likely interest rates will remain low. Whether fiscal stimulus and consumer preferences for this space will persist, and thereby continue to support house prices, is still an unknown.
Should you wish to discuss this or any other investment related matter, please contact your Investment Services 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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