Pre-Open Data
Key Data for the Week
- Thursday – EUR – Unemployment Rate fell to 6.8% in January, from 7.0% in December.
- Thursday – AUS – Trade Balance – The trade surplus widened to $12.9 billion in January, up from a surplus of $8.8 billion in December.
- Friday – US – Unemployment Rate
Australian Market
The Australian sharemarket advanced 0.5% on Thursday, to post its fifth consecutive gain. The market was boosted by the Energy and Materials sectors, which both rose 2.6%.
Oil stocks lifted on concerns Russia’s oil supply will be heavily disrupted under imposed economic sanctions; Beach Energy gained 4.7% and Woodside Petroleum added 3.0%, while Santos rose 1.7%.
Miners were amongst the top performers as commodity prices traded higher; Whitehaven Coal and Yancoal jumped 10.6% and 11.0% respectively. Iron ore heavyweights also strengthened; BHP gained 3.6% and Rio Tinto lifted 3.7%, while Fortescue Metals rallied 4.2%. However, gold miners posted losses; Northern Star Resources shed 1.9% and Evolution Mining fell 1.7%, while Newcrest Mining slipped 1.1%.
The Consumer Staples sector was the main laggard, down 2.3%, after major supermarkets traded ex-dividend; Woolworths lost 2.1%, while Coles gave up 1.7%.
The major banks were mixed; Westpac closed down 0.5% and Commonwealth Bank slipped 0.2%, while NAB added 0.4% and ANZ finished the session relatively flat. Insurers were weaker; Suncorp lost 1.1% and QBE Insurance fell 0.8%, however, Insurance Australia Group bucked the trend to add 0.7%.
The Australian futures market points to a 0.82% fall today.
Overseas Markets
European sharemarkets were weaker on Thursday. The Banking sector gave up 1.6%; Lloyds Bank fell 1.7% and HSBC shed 2.4%, while Deutsche Bank and Barclays Bank gave up 2.8% and 4.5% respectively. Travel and leisure stocks also declined; International Airlines Group slid 6.4% and easyJet fell 7.4%, while German airline Lufthansa lost 8.2% after the company stated it was unable to provide a detailed 2022 outlook due to uncertainties surrounding the Russia-Ukraine conflict and the COVID-19 pandemic.
By the close of trade, the STOXX Europe 600 closed down 2.0%, while the German DAX and UK FTSE 100 lost 2.2% and 2.6% respectively.
US sharemarkets also posted losses overnight. The Information Technology sector lost 1.2%; Netflix slipped 3.2% and Fortinet fell 2.5%, while NVIDIA and Microsoft closed down 2.1% and 1.4% respectively. Renewable energy stocks enjoyed gains; electric vehicle infrastructure company ChargePoint jumped 6.7%, while NextEra Energy rose 1.6%. By the close of trade, the NASDAQ gave up 1.6%, while the S&P 500 and Dow Jones fell 0.5% and 0.3% respectively.
CNIS Perspective
On Wednesday we noted housing prices were starting to slow, and another sign the housing sector is slowing was yesterday’s building approvals data.
Approvals plunged 27.9% in January, which represented the largest monthly fall in the history of data, going back to 1983. They have now fallen 45.1% since their peak in March 2021.
The massive stimulus of lower interest rates, first home buyer grants and stamp duty relief that were aimed at stimulating the housing sector obviously worked.
However, the rapid rise of Omicron infections in January is the likely catalyst for the sharp decline.
Dwelling demand is strong and there remains a large pipeline of residential construction work to be done. However, the headwinds are growing, including affordability constraints, shortage of labour and building materials – not to mention higher interest rates.
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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