Pre-Open Data
Key Data for the Week
- Tuesday – EUR – Consumer Confidence rose to -10.8 in March, from -14.8 in February.
- Tuesday – US – Consumer Confidence rose to 109.7 in March, from 90.4 in February.
- Wednesday – AUS – Building Permits
- Wednesday – EUR – Consumer Price Index
- Wednesday – UK – Gross Domestic Product
Australian Market
The Australian sharemarket eased from morning highs yesterday, to close down 0.9%. Losses were broad based, with the Materials, Utilities and Energy sectors the weakest performers.
The Consumer Staples sector fell 1.0%. Bega Cheese slipped 0.2% and Woolworths lost 0.5%, while A2 Milk Company and Coles both gave up 1.6%.
The Utilities sector also weakened; APA Group and AusNet Services both lost 0.8%, while AGL Energy gave up 3.5% despite announcing plans to “create two leading energy businesses”, PrimeCo and New AGL, via a structural separation. New AGL will focus on low carbon-emitting technologies, while PrimeCo will continue coal-fired power operations.
Losses among mining heavyweights weighed on the Materials sector. Rio Tinto lost 2.4% and Fortescue Metals dropped 2.3%, while BHP closed down 2.1%. Gold miners also posted losses; Northern Star sunk 3.9%, while Newcrest Mining and Evolution Mining fell 1.3% and 1.2% respectively.
The Australia futures market points to a 0.83% rise today.
Overseas Markets
European sharemarkets advanced on Tuesday, as the broad based STOXX Europe 600 gained 0.7% to reach a new 13-month high. The Financials sector enjoyed gains; Barclays jumped 4.9% and HSBC added 3.1%, while Lloyds Bank lifted 2.5% and Deutsche Bank rose 1.6%. Renewable energy stocks were also stronger; Siemens Gamesa climbed 5.8% and Vesta Wind Systems lifted 2.3%. Automaker stocks continued to post strong gains; Volkswagen Group lifted 4.7% and Porsche rose 3.9%, while BMW added 3.7%.
US sharemarkets were weaker overnight as Information Technology stocks came under pressure from rising bond yields. Microsoft fell 1.4% and Fortinet slipped 1.3%, while Apple and Facebook lost 1.2% and 1.0% respectively. Financial services stocks were mixed; PagSeguro Digital gained 3.0% and PayPal rose 0.4%, while Visa slipped 1.2% and MasterCard fell 1.3%. Renewable energy stocks advanced; electric vehicle charging station company ChargePoint Holdings rallied 7.4% and Enphase Energy jumped 6.0%, while SolarEdge Technologies added 4.3%. The Financials sector was a top performer overnight; Wells Fargo gained 2.5% after the company stated it did not experience any losses related to closing out its exposure to Archegos Capital Management, while Bank of America and Morgan Stanley added 1.8% and 1.6% respectively.
By the close of trade, the NASDAQ slipped 0.1%, while the S&P 500 and Dow Jones both fell 0.3%.
CNIS Perspective
One thing that COVID-19 has taught investors is the concept of separating companies into defensive and growth baskets is no longer as straight forward as it once was.
A defensive style company is one with resilient earnings regardless of market cycles and able to retain value despite economic disruption, being a provider of products or services we can’t do without. Generally speaking, these companies fall into sectors like Healthcare, Utilities and Consumer Staples and exclude sectors such as Materials, Energy and Technology.
While the definition of a defensive business hasn’t changed, certain companies in the more volatile Technology sector have now bridged the gap and arguably fall into the ‘defensive’ category.
The likes of Microsoft, Apple and Alphabet for example, no longer act like traditional Technology sector stocks, with their innovative business models and subscription-based services making them resilient to market disruption.
Our reliance on certain Technology businesses for day to day activities mean they are the modern-day Consumer Staples, products and services that we can’t live without!
Should you wish to discuss this or any other investment related matter, please contact your Investment Services 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.
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.
