Pre-Open Data
Key Data for the Week
Australian Market
The Australian sharemarket posted modest gains on Tuesday, following an expected cash rate hike by the Reserve Bank of Australia (RBA). As anticipated by the market, the RBA agreed to lift the Official Cash Rate by 50 basis points to 1.35%, in attempt to steady rising inflation.
The Energy sector was the strongest performer. Woodside Energy gained 3.8% and Beach Energy rose 0.6%, while Santos added 0.4%.
The Materials sector eked out a 0.2% gain, as Fortescue Metals lifted 1.5% and BHP closed up 0.3%, while Rio Tinto finished the session relatively flat. Gold miners enjoyed gains; Evolution Mining closed 2.5% higher, while Northern Star Resources and Newcrest Mining rose 2.1% and 1.3% respectively.
The interest rate sensitive REITs sector was the main market detractor. Stockland lost 2.7% and Scentre Group shed 2.3%, while Goodman Group and Dexus gave up 1.0% and 0.4% respectively.
The Financials sector lost ground, as three of the four major banks posted losses. ANZ, NAB and Commonwealth Bank all fell between 0.4% and 0.2%, however, Westpac finished the session flat. Fund managers rebounded; Magellan Financial Group jumped 4.7%, while Australian Ethical Investment added 4.4%.
The Australian futures market points to a 0.99% fall today.
Overseas Markets
European sharemarkets retreated overnight. The Oil & Gas sector slumped 6.3%; Royal Dutch Shell slid 8.5% and BP tumbled 7.2%, while TotalEnergies gave up 6.4%. The Banking sector also declined; Barclays Bank gave up 5.2% and Deutsche Bank shed 4.1%, while HSBC lost 3.2% and Lloyds Bank fell 3.1%. By the close of trade, the STOXX Europe 600 gave up 2.1%, while the UK FTSE 100 and German DAX both closed down 2.9%.
US sharemarkets posted mixed results on Tuesday. The Energy sector was the leading detractor, down 4.0%, as ExxonMobil fell 3.1% and Chevron lost 2.0%. The Information Technology sector (1.2%) was one of three sectors to advance. Alphabet gained 4.4% and NVIDIA rose 3.0%, while Apple and Microsoft added 1.9% and 1.3% respectively. Semiconductor companies were mixed; Taiwan Semiconductor Manufacturing slid 1.2%, while Intel added 1.0% and Micron Technology climbed 5.7%. By the close of trade, the Dow Jones slipped 0.4%, while the S&P 500 added 0.2% and the NASDAQ gained 1.8%.
CNIS Perspective
There were no surprises with yesterday’s interest rate rise by the RBA, which was the first time since 1994 they have been so aggressive over three consecutive months with their policy implementation.
However, as markets do, we are already looking to next month’s announcement. Will it be another 0.50% or 0.25%?
A look at the foreign exchange suggests the market, at this stage at least, expects only 0.25%.
The Australian Dollar is already sliding against the US Dollar and central bank interest rate decisions are driving the currency.
Overnight, the Australian Dollar softened a further US$0.0079 against the US Dollar, which makes the fall over the past couple weeks US$0.0194 (-2.8%).
Financial markets seem less worried about rampant inflation in Australia as they do in the US, predicting far more aggressive rate hikes in the US.
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