Pre-Open Data
Key Data for the Week
Key economic data released this week:
- Thursday – EUR – Consumer Confidence rose to -14.8 in February.
- Thursday – US – Gross Domestic Product was revised up to an annual pace of 4.1% for the December quarter.
- Thursday – US – Initial Jobless Claims were 730,000 for the week ending 19 February, down 131,000 from the previous week.
Australian Market
The Australian sharemarket rose 0.8% yesterday, with all sectors closing higher except Consumer Staples and Industrials. Mining heavyweights helped lift the market; BHP and Fortescue Metals added 3.3% and 3.1% respectively, while Rio Tinto rose 1.9%.
The Financials sector was strengthened by the big four banks. Westpac and Commonwealth Bank led the gains up 1.3% and 1.1% respectively. Afterpay shares entered a trading halt as the company announced plans to raise up to $1.5 billion to increase its ownership of its US business from 80% to 93%. The company reported a first half net loss after tax of $79 million. Zip Co slipped 7.7% after the company reported adjusted costs after its acquisition of US QuadPay of $140 million.
Flight Centre soared 8.9% despite swinging into a first half loss of $233 million from $22 million profit last year. Qantas rose 1.8% after boss Alan Joyce announced he expects international travel may resume by the end of October and Trans-Tasman flying from July.
A2 Milk slumped 16.2% after the company reported profit fall 35% and lowered FY earnings guidance due to low customer demand from China.
The Australian futures market points to a 1.24% fall today, driven by weaker overseas markets overnight.
Overseas Markets
European sharemarkets closed lower on Thursday, with the broad based STOXX Europe 600 down 0.3%. Veolia Environnement closed flat after the company reported FY revenue of €26 billion, net income of €415 million and expects to achieve strong growth in 2021, which will more than offset the impacts of 2020.
US sharemarkets fell sharply overnight, as 10-year treasury yields rose above 1.5% for the first time in a year. Technology stocks were amongst the weakest performers, as all sectors closed in the red. Alphabet, Apple, Facebook and Microsoft all fell between 2.4% and 3.6%. NVIDIA lost 8.2% despite a strong report after hours on Wednesday. The announcement saw Q4 revenue above expectations, up 61% to US$5 billion, and guided for Q1 revenue of US$5.3 billion, as the company continues to solidify its positioning in gaming and datacenters. There were some concerns regarding its gaming growth rate may be at its peak.
Financial services companies also saw large losses; PayPal fell 4.6%, MasterCard lost 3.5% and Visa slipped 2.6%.
By the close of trade, the Dow Jones fell 2.0%, the S&P 500 lost 2.7% and the NASDAQ slumped 3.8%.
CNIS Perspective
China was never going to sit back and let COVID-19 drive unemployment higher long term.
It is the government’s responsibility, not private enterprise, to provide employment to the people and along with that, a sense of worth and social stability.
The alternative would result in social unrest and so it was more than reasonable to assume the Chinese Government would invest in infrastructure to manage the economic slowdown caused by COVID-19.
What flows from that from an Australian perspective is increased demand for, and the price of iron ore, which ultimately flows into a stronger AUD.
The graph shows the correlation between the price of iron ore and the AUD. There are other factors at play also, but a quick look at the iron ore price will give you a feel of where the AUD is headed.
Should you wish to discuss this or any other investment related matter, please contact your Investment Services Team on (02) 4928 8500.
Disclaimer
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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.
