Pre-Open Data
Key Data for the Week
- Monday – US – Dallas Fed Index decreased to 8.7 in March, from 14 in February.
- Tuesday – AUS – Federal Budget
- Tuesday – AUS – Retail Sales
Australian Market
The Australian sharemarket added 0.1% yesterday, as bond yields in both Australia and the US rose, and investors awaited the release of the Federal Budget.
The Materials sector was the best performer on the market, up 1.3%, as the price of iron ore increased given the recent COVID-19 outbreak in China. BHP rose 2.3% and Rio Tinto lifted 1.4%, while Fortescue Metals closed the session 0.8% higher. Lithium producers were mixed; Pilbara Minerals lost 0.3%, while Allkem added 2.2%.
Gains among the big four banks buoyed the Financials sector, which added 0.6%. Westpac led the gains and lifted 1.2%, while Commonwealth Bank, NAB and ANZ all added between 0.2% and 0.8%. Fund managers, Australian Ethical Investment and Magellan Financial Group continued their recent weakness, to fall 1.8% and 1.3% respectively.
Accounting software provider, Xero, led the losses in the Information Technology sector, as the company closed the session down 5.2% to under $100 per share. Buy-now-pay-later provider also lost ground; Block shed 3.7%, while Zip conceded 3.3%.
In company news, Star Entertainment Group CEO, Matt Bekier, announced his resignation, which follows recent findings of failing to prevent criminal activity in the casinos, and as a result, shares rose 0.3%.
The Australian futures market points to a 0.51% rise today, driven by stronger overseas markets.
Overseas Markets
European sharemarkets were mixed overnight, as gains in the Financials sector were overshadowed by losses in the Energy sector. BNP Paribas was among the best performing banks, up 2.2%, while Banco Santander lifted 0.1%. Barclays was a notable decliner in the sector, down 4.1%, after the company disclosed a £450 million loss due to mishandled structured products.
By the close of trade, the STOXX Europe 600 added 0.1% and the German DAX lifted 0.8%, while the UK’s FTSE 100 closed the session relatively flat.
US sharemarkets rose on Monday, despite the oil majors suffering losses due to the decrease in oil price. The Information Technology sector was led by Tesla, which gained 8.0% after the company announced it will seek shareholder approval for a stock split. Of the other technology companies, Apple added 0.5%, Amazon lifted 2.6% and Microsoft rose 2.3%. By the close of trade, the NASDAQ lifted 1.3%, while the Dow Jones and S&P 500 closed up 0.3% and 0.7% respectively.
CNIS Perspective
Tonight we see the 2022-23 Federal Budget released by Treasurer Josh Frydenberg, with the Government likely to be very happy with where the economy sits, compared to expectations over the last two years.
Generally speaking, you would expect to see significant sweeteners unveiled on Budget night ahead of an upcoming election. However, after two Budgets of intense government spending, it’s hard to see this being appropriate, or required, this time around.
While the Government has been surprisingly tight lipped on what will be released tonight, there is no doubt the words ‘cost of living’ will be front and centre.
There is speculation the Government will cave to public pressure and temporarily reduce the fuel excise (currently 44.2 cents/litre), with a 5-cent cut, for six months, costing the economy roughly $1 billion.
One thing the Government is likely to focus on tonight is Australia’s improved public debt position, which will likely come in well ahead of previous estimates.
This can be put down to elevated revenues, largely from exceptionally strong commodity demand and prices, along with pent-up consumer spending as restrictions were rolled back, rather than a sharp tightening in spending or an increase in taxes.
Unless purse strings are tightened, structural deficits are likely to remain an issue over the longer term. While the Australian economy is in strong position, now is as good a time as ever to reign this in.
Should you wish to discuss this or any other investment related matter, please contact your Wealth Management Team on (02) 4928 8500.
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