Pre-Open Data
Key Data for the Week
- Tuesday – US – Consumer Confidence
- Tuesday – US – New Home Sales
- Wednesday – AUS – Consumer Price Index
- Thursday – EUR – Economic Confidence
- Thursday – UK – Nationwide House Prices
- Friday – AUS – Producer Price Index
- Friday – EUR – Consumer Price Index
Australian Market
The Australian sharemarket lost ground on the day prior to the ANZAC day long weekend, as concerns over increasing interest rates weighed on investor sentiment. This comes as it is predicted the US Federal Reserve will seek to implement a 0.5% increase to rates.
The Materials sector was among the worst performers on the market on Friday, as it lost 3.3%. BHP was the hardest hit, down 4.4%, while Rio Tinto and Fortescue Metals dropped 2.4% and 1.2% respectively. Goldminers also weakened; Northern Star Resources conceded 4.4%, while Evolution Mining closed the session 3.9% lower.
The major banks weighed on the Financials sector, with all four banks closing in the red. As a result, the sector lost 1.7%, as Commonwealth Bank shed 2.8%, while NAB, Westpac and ANZ all closed between 0.8% and 1.4% lower.
Gains across Health Care stocks provided the only reprieve for the local sharemarket. Sector giant, CSL, added 1.5%, while Ramsay Health Care added a further 1.7% after the company jumped on the news it had received a takeover bid.
The Australian futures market points to a 0.34% loss today.
Overseas Markets
European sharemarkets closed lower on Monday, weakened by the Materials sector as it continues to be weakened by the increased COVID lockdowns in China. As a result, Glencore lost 4.5% and Rio Tinto slipped 3.7%. The oil majors were lower as the price of oil retreated; BP shed 3.6% and Royal Dutch Shell lost 5.1%. By the close of trade, the UK’s FTSE 100 fell 1.9% and the STOXX Europe 600 dropped 1.8%, while the German DAX lost 1.5%.
US sharemarkets finished higher overnight, after experiencing three straight weeks of declines. The Information Technology sector rose; Fortinet and CrowdStrike jumped 6.3% and 4.4% respectively, while Alphabet added 3.0% and Amazon lifted 1.2%. Earnings reports continue this week, with many more companies still to report.
By the close of trade, the Dow Jones added 0.7% and the NASDAQ lifted 1.3%, while the S&P 500 closed up 0.6%.
CNIS Perspective
One of the biggest winners from mounting market angst appears to be the old stalwart of gold over the past quarter, especially in Europe where their listed exchange traded funds (mirroring the gold price), have received unprecedented inflows for the first quarter of the year.
According to the World Gold Council, total gold assets are now just 1.8% below the all-time high recorded in October 2020, a figure reached not long after the peak of the gold price in August, where the gold price reached an all-time high of US$2,075/tonne.
It’s not hugely surprising that gold has rallied to start the year, given the metal’s reputation as a safe haven during times of heightened risk.
However, the most likely catalyst for gold to rally further from here, and breach previous highs, would require greater risk impetus that isn’t yet priced in.
From a geopolitical standpoint, clearly escalation of the Russia/Ukraine war could be a key driver of gold’s outperformance. Additionally, further upward pressure on global inflation rates that isn’t already expected would need to eventuate, in order to encourage investors to invest more heavily in gold products in the near term.
Should you wish to discuss this or any other investment related matter, please contact your Wealth Management Team on (02) 4928 8500.
Disclaimer
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