Pre-Open Data
Key Data for the Week
- Tuesday – AUS – Federal Budget posted a deficit of $79.8 billion.
- Tuesday – AUS – Retail Sales rose 1.8% in February, up from 1.6% in January.
- Wednesday – EUR – Consumer Confidence
Australian Market
The Australian sharemarket lifted 0.7% yesterday, to mark the sixth consecutive day of gains, in what was the trading session prior to the release of the Federal Budget.
Gains were led by the Information Technology sector, which added 3.3% as a result of a strong lead from the US. Artificial intelligence provider, Appen, enjoyed a 6.7% lift, while accounting software provider, Xero, and software company, WiseTech Global, rose 3.3% and 3.7% respectively. Afterpay’s parent company, Block, jumped 6.8%, while Sezzle closed the session 4.5% higher.
The Consumer Discretionary sector also rose, as investors expected measures to be included in the Budget to reduce the cost of living. As a result, Wesfarmers added 1.8% and JB Hi-Fi lifted 2.3%, while Harvey Norman rose 1.3%.
The price of oil continued its recent decline as lockdowns in China continue to impact demand. Woodside Petroleum dropped 1.1%, Santos conceded 0.3% and Beach Energy closed the session 2.1% lower. Coal miners also weighed on the Energy sector; Whitehaven Coal fell 4.3% and Yancoal dropped 2.5%.
The Australian futures market points to a 0.75% rise today, driven by stronger overseas markets.
Overseas Markets
European sharemarkets enjoyed gains overnight, as automaker and technology stocks boosted the indices. Volkswagen Group lifted 5.1% and BMW rose 5.6%, while Porsche jumped 6.7%. Amongst the renewable energy stocks, Infineon Technologies added 4.5%, while Veolia Environnement lifted 4.1%. By the close of trade, the STOXX Europe 600 added 1.8% and the German DAX lifted 2.8%, while the UK’s FTSE 100 gained 0.9%.
US sharemarkets also lifted on Tuesday, as most sectors enjoyed gains. The Information Technology sector continued its recent strength; PayPal added 4.3% and Netflix rose 3.5%, while Apple closed the session 1.9% higher. The Travel and Leisure sector also rose; Ryanair added 3.5% and American Airlines Group lifted 5.0%. By the close of trade, the NASDAQ lifted 1.8%, while the Dow Jones and S&P 500 closed up 1.0% and 1.2% respectively.
CNIS Perspective
In times of uncertainty or risk-off sentiment, Australian investors generally head straight to safe haven assets as a means of protecting their money.
The first port of call is usually the US Dollar, with the flight to safety driving the US Dollar higher. At the same time, equities, usually considered riskier, get sold off and fall in value.
This period of uncertainty is very different.
Investors have headed straight back to the US stock market for safety, with the S&P 500 up 8% in the past two weeks, recouping all its losses since the Russian invasion. The NASDAQ has gained almost 11%.
Unusually, US stocks seem the safest option for global investors, given earnings remain strong.
US stocks are considered reliable earnings growers and are relatively low on debt.
At the same time, the traditional safe haven US Dollar has fallen against the Australian Dollar.
Should you wish to discuss this or any other investment related matter, please contact your Wealth Management Team on (02) 4928 8500.
Disclaimer
The material contained in this publication is the nature of the general comment only, and neither purports, nor is intended to be advice on any particular matter. Persons should not act nor rely upon any information contained in or implied by this publication without seeking appropriate professional advice which relates specifically to his/her particular circumstances. Cutcher & Neale Investment Services Pty Limited expressly disclaim all and any liability to any person, whether a client of Cutcher & Neale Investment Services Pty Limited or not, who acts or fails to act as a consequence of reliance upon the whole or any part of this publication.
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