Pre-Open Data
Key Data for the Week
- Monday – UK – Rightmove House Prices increased for a third consecutive month in March, up 1.7%.
- Tuesday – UK – Public Sector Borrowing
Australian Market
The Australian sharemarket lost 0.2% yesterday, despite a strong start to the session as the ASX followed a solid lead from the US. Investors showed signs of caution as the surge in energy and metal prices could lead to more inflationary worries.
The Information Technology sector was the best performer on the market yesterday and rose 2.5%. The sector was led by gains among the buy-now-pay-later providers, as Afterpay’s parent company, Block, jumped 9.2%. Accounting software provider, Xero, added 2.4%, while Altium closed the session 2.0% higher.
The major miners led the Materials sector higher; Fortescue Metals added 0.8%, while BHP and Rio Tinto gained 0.4% and 0.1% respectively. Lithium producers continued their recent run of strength, as Allkem added 0.3%, Pilbara Minerals was up 2.5% and Liontown Resources lifted 5.4%.
Losses from the big four banks weighed on the Financials sector, which closed down 0.6%. NAB lost 1.0% and Commonwealth Bank conceded 0.6%, while Westpac dropped 0.5% and ANZ closed the session relatively flat. Fund managers were mixed; Australian Ethical Investment added 1.2%, while Magellan Financial Group lost 4.3% after the company announced that co-founder, Hamish Douglass, has resigned from the board due to his medical leave of absence.
The Australian futures market points to a 1.09% rise today.
Overseas Markets
European sharemarkets were mixed overnight, as the Materials and Energy sectors were lifted by increases in commodity prices, which comes as Australia banned aluminium ores exports to Russia. As a result, Rio Tinto added 3.5% and Glencore rose 3.9%. The oil majors climbed; BP gained 4.1%, while Royal Dutch Shell closed the session 3.3% higher. By the close of trade, the German DAX slipped 0.6%, while the UK’s FTSE 100 rose 0.5% and the STOXX Europe 600 closed up 0.1%.
US sharemarkets lost ground on Monday, as most sectors closed the session lower. Major technology stocks lost ground, as Meta conceded 2.3% and Netflix lost 1.6%, while Microsoft shed 0.4%. Airline providers closed the session lower, following the fatal incident in China overnight; Boeing dropped 3.6% and International Consolidated Airlines Group slipped 1.0%. By the close of trade, the Dow Jones closed down 0.6%, while the NASDAQ dropped 0.4% and the S&P 500 lost less than 0.1%.
CNIS Perspective
We often discuss that uncertainty is the one of the key detractors from equity market performance, as markets tend to be more volatile when there are significant ‘unknowns’ overhanging.
The prime example of this has been the month of March, with fear within the stock market detracting from sharemarket performance, as the S&P 500 gave up 4.5% in the first two weeks of March.
The Volatility Index (VIX) rates ‘fear’ within markets, with a figure above 20 considered high.
Heading into the US Federal Reserve’s interest rate decision last week, the VIX was well in excess of 30, before the announcement last week of a 25-basis point rise in the official cash rate.
Since the announcement however, equity markets have rallied, recovering March equity market losses, while the VIX has fallen to a March low of 23.87.
This might sound a little bit counterintuitive if you consider moves to slow the economy might hurt company profits and cool growth, but the ‘unknown’ now becomes a ‘known’ fact the market can digest.
It goes to show, that while there is significant noise within equity markets at the moment, the key focus remains firmly on the US Federal Reserve’s monetary policy settings, and its ability to keep markets informed as it rolls out a planned six rate hikes for the remainder of 2022.
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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