Pre-Open Data
Key Data for the Week
- Thursday – AUS – Trade Balance surplus widened to $10.5 billion in April, above expectations.
- Friday – EUR – Retail Sales
- Friday – US – Unemployment Rate
Australian Market
The Australian sharemarket declined 0.8% on Thursday, weighed down by losses made in the Health Care (-1.8%) and Information Technology (-2.5%) sectors. Notable detractors included index heavyweights CSL Limited (-1.8%) and Xero (-3.0%).
Broad losses in the local sharemarket offset gains from the Energy (3.1%) sector, the session’s strongest performer, despite a report that Saudi Arabia was willing to increase production if Russian output fell. The newly named Woodside Energy was an important contributor in the sector, up 5.2%, following the finalisation of its oil and gas merger with BHP Group. The Standard & Poor’s ratings agency stated on Wednesday that the merger improved Woodside Energy’s funding flexibility and that it would deliver, “a material boost to cash flow”. Meanwhile, S&P Global cut BHP’s long-term credit rating to A- on Thursday, after it noted that the mining giant’s portfolio is now slightly less diversified and robust when compared to its immediate peers like Rio Tinto and Glencore.
In other company news, Wesfarmers (-0.6%) held a strategy briefing day, in which it stated that inventory levels would remain elevated for the second half of the financial year. It also noted that its industrial and safety division has been impacted by COVID-19 disruptions and inflation. Furthermore, following its agreement with the US Food and Drug Administration (FDA), Bubs Australia (6.0%) announced that its first deliveries of baby formula into the US would be made late next week.
The Australian futures market point to a 1.06% increase today, after a strong lead from overseas markets.
Overseas Markets
European sharemarkets rebounded on Thursday, to partially offset losses experienced in June so far. Gains were led by industrial and luxury good stocks, however, were still limited by ongoing concerns around higher costs and stunted economic growth. Nevertheless, these concerns eased somewhat yesterday, following data which showed Eurozone producer prices rose 1.2% in April, below the expected 2.3% rise. The Industrials sector broadly advanced 1.6%, with Siemens (2.2%) being a key contributor, while luxury goods companies also gained as LMVH and L’Oreal added 1.7% and 3.1% respectively. By the close of trade, the STOXX 600 rose 0.6% and the German DAX advanced 1.0%, while the UK market was closed for a public holiday.
US sharemarkets posted widespread gains on Thursday, with only the Energy (-0.3%) sector in the red, despite a 1.0%-1.5% jump in global oil prices. The Consumer Discretionary sector led the market higher, up 3.0%, with key contributors being Amazon (3.2%) and Tesla (4.7%). The Information Technology (2.4%) sector also performed well, as technology heavy weights Alphabet (3.2%), Meta Platforms (5.4%) and Netflix (6.3%) all advanced. Other notable movers included Enphase Energy, SolarEdge Technologies and ChargePoint Holdings, which surged 9.0%, 10.3% and 11.7% respectively. By the close of trade, the Dow Jones (1.3%), S&P 500 (1.8%) and NASDAQ (2.7%) all closed ahead.
CNIS Perspective
Hidden in Wednesday’s solid GDP result was multiple levels of supportive data like the savings rate, accumulated savings, consumption levels and gaming.
The below graph is another indicator that supports the strength of the economy, given the significant contribution that consumption plays in economic growth. The graph plots disposable income and consumption since 2000.
What’s encouraging is the rebound in consumption post pandemic. In the first quarter of 2022, disposable income grew by 4.2% and consumption grew 7.1%.
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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