Pre-Open Data
Key Data for the Week
- Tuesday – UK – ILO Unemployment Rate fell to 4.9% in February, down from 5.0% in January.
- Wednesday – AUS – Retail Sales
- Wednesday – UK – Consumer Price Index
Australian Market
The Australian sharemarket closed down 0.7% on Tuesday. Losses were broad based, with Telecommunications the only sector to advance, up 0.2%. The Information Technology sector led the losses, down 1.2%, followed by Health Care and Energy, which gave up 1.1% and 1.0% respectively.
Losses among most mining heavyweights weighed on the Materials sector, down 0.4%. BHP slipped 0.2%, while Rio Tinto gave up 0.5% following its 1Q21 update, which reported that iron ore production fell 2.0%, impacted by frequent wet weather conditions in their mines during February. However, Fortescue Metals bucked the trend to gain 1.9%.
The Financials sector fell 0.9%, as all major banks closed weaker. Commonwealth Bank led losses, down 1.2%, followed by ANZ which slipped 0.9%, while NAB and Westpac eased 0.7% and 0.5% respectively. Asset managers were mixed; Australian Ethical Investment gained 2.0%, while Magellan Financial Group slipped 0.5% and Challenger tumbled 15.8% after the company advised investors that profit would likely be at the low end of its guidance range.
The REITs sector eased 0.3%. Cromwell Property Group and GPT Group both fell 1.7%, while Stockland gave up 2.4% despite reporting strong net residential sales for the March quarter, which was up 69.0% from 3Q21.
The Australian futures market points to a 1.24% fall today, driven by weaker overseas markets.
Overseas Markets
European sharemarkets declined on Tuesday, as weakness among tobacco stocks weighed on the market. British American Tobacco and Imperial Brands shed 7.6% and 7.3% respectively following a report the Biden Administration was considering lowering the level of nicotine in all cigarettes sold in the US. The Financials sector was the weakest performer; Barclays gave up 3.1% and Lloyds Bank lost 3.9%, while Deutsche Bank shed 4.2%.
By the close of trade, the German DAX lost 1.6% and the broad based STOXX Europe 600 fell 1.9%, while the UK FTSE 100 closed down 2.0%.
US sharemarkets also eased overnight, as concerns about the global rise in COVID-19 cases weighed on the market. Airline stocks were weaker; Delta Air Lines fell 3.7% and Boeing lost 4.1%, while American Airlines Group shed 5.5%. The Information Technology sector also underperformed; Spotify gave up 3.3% and Fortinet fell 1.6%, while Apple and Alphabet slipped 1.3% and 0.4% respectively.
By the close of trade, the S&P 500 and Dow Jones eased 0.7% and 0.8% respectively, while the NASDAQ lost 0.9%.
CNIS Perspective
We have discussed often over the past 12 months that the store of cash the Australian consumer has built up is likely to boost economic growth throughout this year. Well this phenomenon is not isolated to Australia according to a recent report on global savings.
Households around the world have stockpiled an extra US$5.4 trillion of savings since the start of 2020, with excess savings now making up a staggering 6% of global GDP.
With consumer spending key in driving economic growth, Moody’s have estimated if consumers spend roughly a third of their excess savings, they will boost global output by over 2% both this year and next.
This indicates that positive times are ahead for synchronised global growth. Having a backdrop of savings is important at this point in time, when the outlook for consumer confidence is increasing, paving the way for a strong rebound in spending as businesses reopen and travel resumes.
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.
Cutcher & Neale Investment Services Pty Limited ABN 38 107 536 783 is a Corporate Authorised Representative of Cutcher & Neale Financial Services Pty Ltd ABN 22 160 682 879 AFSL 433814.
