Pre-Open Data
Key Data for the Week
- Monday – AUS – MI Inflation
- Monday – AUS – Building Approvals
- Tuesday – AUS – RBA Interest Rate Decision
- Wednesday – EUR – Retail Sales
- Wednesday – UK – FOMC Meeting Minutes
- Thursday – AUS – Trade Balance
- Thursday – US – Trade Balance
- Friday – US – Unemployment Rate
Australian Market
The Australian sharemarket lost ground on Friday, as the Materials and Energy sectors led the broad declines. As a result, the ASX 200 conceded 0.4% to end the week, as inflationary jitters still pose risks for investors.
The Energy sector was the hardest hit on Friday, as the price of oil slipped a further 3.0% on the fears of global economic downturn. Woodside Energy dropped 4.4% and Santos slipped 2.8%, while Beach Energy closed the session 1.2% lower.
The price of iron ore also dropped to approximately US$118, as investors still remain cautious over the demand for steel in China. As a result, BHP dropped 2.9%, while Fortescue Metals and Rio Tinto conceded 3.0% and 2.3% respectively.
The Information Technology sector bucked the downward trend to close the session in positive territory. Buy-now-pay-later provider Zip added 9.1% and Tyro Payments lifted 0.8%, while Xero eked out a less than 0.1% gain.
The Australian futures market points to a 1.47% gain today, driven by stronger overseas markets.
Overseas Markets
European sharemarkets closed higher on Friday, despite losing ground early in the trading session. Gains were led by the Utilities sector, which added 3.1%, while the Retail and Food & Beverages sectors also enjoyed gains. However, the Materials sector was the main laggard, as Rio Tinto dropped 0.9% and Glencore shed 4.8%. By the close of trade, the STOXX Europe 600 and the UK’s FTSE 100 both closed relatively flat, while the German DAX lifted 0.2%.
US sharemarkets were also higher to end the week, with gains led by the Utilities and Information Technology sectors, in what was a light trading session ahead of a long weekend. NextEra Energy was the best performer in the Utilities sector, up 4.0%, while Amazon (3.2%) and Netflix (2.9%) outperformed in the Information Technology sector. By the close of trade, the Dow Jones and the S&P 500 both added 1.1%, while the NASDAQ gained 0.9%.
CNIS Perspective
The yield on Australian 10-year government bonds has eased back to 3.584%, in line with other nations such as Canada and New Zealand, after peaking at 4.3675% in mid-June.
The situation is similar in the US, where the yield has reduced to 2.904% from a height of 3.5632% last month, as investors saw value in the yields of secure government bonds, historically referred to as risk-free.
This reduction in yields has a positive effect on the discount rates that are used to value equities listed on the sharemarket, encouraging investors to pay more for future cash flows due to the lower risk-free rate, and is an encouraging step towards resolving the volatility that we’ve been experiencing.
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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