Pre-Open Data
Key Data for the Week
- Tuesday – US – Markit Manufacturing PMI advanced to 57.5 in February, from 55.5 in January.
- Wednesday – AUS – Wage Price Index
- Wednesday – EUR – Consumer Price Index
Australian Market
The Australian sharemarket lost 1.0% yesterday, as the Information Technology sector led losses on the market.
The Information Technology sector fell 3.2% yesterday as concerns over the tension between Russia and Ukraine dampened investor confidence in the sector. Buy-now-pay-later providers were out of favour; Block conceded 4.3%, while Zip plummeted 9.7%. Artificial Intelligence producer, Appen, dropped 4.5%, while Xero slipped 3.1%.
All of the major miners closed the session lower, however goldminers enjoyed gains. Fortescue Metals lost 1.5%, while Rio Tinto and BHP lost 1.4% and 0.9% respectively. Goldminers, which are historically used as a hedge against inflation, limited the losses in the Materials sector. Northern Star Resources added 4.6%, while Evolution Mining closed the session 2.8% higher.
The price of Brent crude oil reached its highest price since 2014, US$97.66, with investors cautious of the impact any conflict involving Russia could have. As a result, Woodside Petroleum added 3.8%, Santos lifted 3.2% and Beach Energy rose 3.4%.
The Australian futures market points to a relatively flat open today.
Overseas Markets
European sharemarkets were mixed overnight, as they recovered from falls early in the trading session. The Travel and Leisure sector enjoyed gains; easyJet added 1.6% and International Airlines Group lifted 1.8%. Information Technology stocks rebounded after recent weakness, as ASML Holdings lifted 2.2%.
By the close of trade, the UK FTSE 100 rose 0.1% and the STOXX Europe 600 closed relatively flat, while the German DAX gave up 1.3%.
US sharemarkets closed lower on Tuesday, as the markets re-opened after the holiday. Most sectors closed the trading session lower, weakened by increasing tensions in the east of Europe. The big tech companies led the losses; Netflix shed 3.6% and Apple lost 1.8%, while Amazon and Alphabet dropped 1.6% and 0.8% respectively. The Energy sector also declined, as NextEra Energy lost 0.5% and ExxonMobil closed the session 1.6% lower.
By the close of trade, the Dow Jones dropped 1.7% and S&P 500 closed down 1.0%, while the NASDAQ conceded 1.5%.
CNIS Perspective
Over the past decade or so, wages growth data has hardly raised an eyebrow given it has remained benign for so long.
However, the critical wage price index for the December quarter is due to be released today and it offers a valuable insight into the future of interest rates in Australia.
Financial markets are expecting a rise in wages growth of only 0.7%, which would take annual growth to 2.3%, up from 2.2% in the September quarter.
If so, that would not necessarily represent a precursor to higher interest rates in Australia.
Of course, a larger than expected wage gain would be a different story and trigger concerns of higher rates sooner.
Interestingly, Western Australia’s wages growth remains relatively steady, even with a sub-4% unemployment rate.
This makes today’s wages growth data very interesting indeed.
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.
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.
