Pre-Open Data
Key Data for the Week
Australian Market
The Australian sharemarket closed 0.6% higher on Wednesday, after a handful of upbeat earnings reports and economic data offset the global sell down pressure triggered by the escalated Russia-Ukraine conflict.
In company news, Woolworths lifted 1.4%, after it posted an 8.0% increase in revenue, despite an 11.0% drop in EBIT and 26.4% cut to its dividend. On the other hand, health care facility provider, Healius (5.3%), announced its best dividend since 2015, alongside a 226.2% surge in profit. Software logistics provider, WiseTech Global (4.2%), reported an 18% rise in revenue and 74% increase in profit. However, not all reports were positive, as Dominos Pizza (-14.0%) fell as a result of weakened earnings and profit levels.
Nine out of the eleven sectors advanced, led by the Information Technology (2.2%) sector. Key contributors included Megaport (4.0%) and Block Inc (4.1%), alongside Zip which rallied, up 8.4%. SEEK (3.0%) and Telstra (2.3%) were standout performers in the Telecommunications (1.9%) sector, while Allkem (6.8%) and Mineral Resources (2.5%) were key advancers in the Materials (0.7%) sector.
The Financials sector edged 0.3% higher, despite a mixed result from the big banks, after Commonwealth Bank (0.7%) and Westpac (0.6%) advanced, while ANZ (-0.9%) and NAB (-0.5%) declined.
The Australian futures market points to a 1.28% decrease today.
Overseas Markets
European sharemarkets were mixed on Wednesday, as the UK FTSE 100 edged 0.1% higher, while the STOXX Europe 600 and German DAX inched 0.3% and 0.4% lower, respectively. London listed banks were key performers, after Lloyds Banking Group (1.7%) and Barclays (3.1%) advanced. Barclays’ share price jumped after it reported record quarterly profit and increased investor payouts. Meanwhile, the supply chain impact of the global conflict was cited by Rio Tinto (-2.2%), as it warned US sanctions on Russia could disrupt aluminium supply.
US sharemarkets were sold-off on Wednesday, as global tensions rose and investors remained focussed on Federal Reserve monetary policy predictions. Reports that Ukrainian government and bank websites suffered from cyberattacks heightened anxiety around the conflict. Meanwhile, markets currently expect the Federal Reserve to settle on approximately six 25 basis point hikes in 2022. All sectors closed in the red, except the Energy (1.0%) sector, which benefited from a rise in the price of oil. Large technology related stocks were key detractors, as Microsoft and Apple shed 2.6%, while Meta Platforms (-1.8%) and Amazon (-3.5%) also fell. By the close of trade, the S&P 500 (-1.8%), NASDAQ (-2.6%) and Dow Jones (-1.4%) all weakened.
CNIS Perspective
As suspected, Australia’s wage growth data released yesterday confirms inflationary pressure from higher wages is gaining momentum. Wages grew at the fastest quarterly pace in nearly 8 years, up 0.7% over the December quarter, to be 2.3% higher over the year.
The RBA stated that it wants to see wage pressure pick up before it can conclude that inflation will remain sustainably within the 2-3% target band.
They have previously referred to 3% as a minimum level of wages growth that would be consistent with inflation sitting within the band. More recently, the RBA Governor has pushed back against a specific target and noted that the RBA Board will be considering broader measures of wage pressures as part of its monetary policy decision making.
An increase in wage pressure, combined with continued strength in the economy, a falling unemployment rate, and upward pressure on inflation, suggests broader issue may soon materialise and trigger an increase in the Official Cash Rate.
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