Pre-Open Data
Key Data for the Week
- Thursday – US – Initial Jobless Claims fell to 411,000 this week, down from 418,000 the previous week.
- Thursday – UK – Bank of England Bank Rate – The BoE left interest rates unchanged at 0.1%.
- Friday – CHINA – Current Account
Australian Market
The Australian sharemarket fell 0.3% on Thursday in a mixed session of trade. The Health Care sector was the weakest performer, down 1.8%, followed by Energy, which lost 1.2%, while Information Technology and Consumer Staples were the top improvers, up 2.1% and 1.9% respectively.
The Financials sector was dragged lower by weakness amongst major banks. Commonwealth Bank slipped 0.6% and ANZ fell 0.8%, while NAB gave up 1.1%. Westpac lost 1.0% after the company announced it decided against the demerger of Westpac New Zealand and will retain 100% ownership. Fund managers enjoyed gains; Australian Ethical Investment lifted 2.5%, while Magellan Financial Group added 1.6%.
Gains among mining heavyweights lifted the Materials sector; BHP and Rio Tinto rose 0.9% and 1.2% respectively, while Fortescue Metals added 1.2%. However, gold miners weakened; Northern Star Resources shed 3.7% and Evolution Mining lost 1.9%, while Newcrest Mining slipped 1.3%.
Woolworths closed down 11.2% following the market debut of its liquor store and hotels business Endeavour Group. Endeavour Group, which owns BWS and Dan Murphy’s, fell 7.4% in its first day of trade. Despite these losses, the Consumer Staples sector closed stronger, with Coles and Bega Cheese both up 1.6%.
The Australian futures market points to a 0.71% rise today.
Overseas Markets
European sharemarkets advanced overnight. Travel and leisure stocks improved; Lufthansa lifted 0.4% and easyJet added 1.2%, while Ryanair gained 1.4%. Airbus rose 0.6% despite a call from regulators for more rigorous safety checks as jets are removed from pandemic storage. Renewable energy stocks enjoyed gains; Vestas Wind Systems added 2.5%, while Siemens Gamesa rose 1.9%. By the close of trade, the German DAX and STOXX Europe 600 both improved 0.9%, while the UK FTSE 100 rose 0.5%.
US sharemarkets also improved on Thursday. US President Joe Biden announced a US$1.2 trillion bipartisan Senate bill, which includes US$579 billion in new expenditure on the nation’s power grid, broadband internet services and passenger and freight rail. The Information Technology sector added 0.6%. Spotify gained 2.9% and NVIDIA rose 0.8%, while Alphabet lifted 0.7%. Financial services enjoyed strong gains; PagSeguro Digital improved 2.2% and PayPal rose 1.8%, while Visa lifted 0.7%. By the close of trade, the Dow Jones and NASDAQ gained 1.0% and 0.7% respectively, while the S&P 500 rose 0.6%.
CNIS Perspective
The extraordinary recovery of the US economy is likely to make them the world’s top destination for overseas investment once again, after dropping to second spot behind China during the height of the pandemic.
Overseas investment by businesses around the world on average fell by a third in 2020 from the previous year. The US recorded over a 40% fall in investment.
However, with foreign businesses drawn in by the prospect of a rapid and sustained rebound in US consumer spending and the Biden administration’s multi-trillion dollar infrastructure plans, it is expected the US will cement its leading position this year and next, as overseas investors expand capacity to meet huge post-pandemic demand.
The Federal Reserve expects the US economy to grow 7% this year, supported by nearly US$6 trillion in approved stimulus spending and about US$2.6 trillion in extra savings, which US households have built up during the pandemic.
With the US and the wider global economy recovering at a faster pace than many expected at the start of the year, it is expected businesses around the world will increase foreign investments by 10-15% this year and a further 20-30% in 2022.
That would take foreign investment back to well above pre-pandemic levels.
Should you wish to discuss this or any other investment related matter, please contact your Investment Services Team on (02) 4928 8500.
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