Pre-Open Data
Key Data for the Week
Key economic data released this week:
- Thursday – UK – BoE Interest Rate Decision remained unchanged at 0.1%.
- Thursday – US – Fed Interest Rate Decision remained unchanged at 0.25%.
- Friday – US – Unemployment Rate
Australian Market
The Australian sharemarket rose 1.3% yesterday, following gains on global markets on Wednesday night. The Health Care sector was the best performer, led by CSL, up 3.5%.
The Financials sector was strengthened by the big four banks; NAB lifted 3.3% after the company released FY20 results in line with expectations, with full-year earnings down over 46%. Westpac added 2.0%, Commonwealth Bank rose 1.8% and ANZ gained 0.9%. Macquarie Group underperformed, down 0.3%, while Magellan Financial Group led fund managers, up 3.4%.
Property stocks performed strongly; Stockland gained 3.3%, Cromwell Property Group added 2.7% and Ingenia Communities rose 2.5%.
Consumer Staples firmed; Coles rose 2.0%, Woolworths added 1.6% and Wesfarmers gained 1.5%. Travel stocks continued to rise with the easing of border restrictions; Flight Centre and Webjet added 6.9% and 5.3% respectively.
Treasury Wine Estates slipped 8.2% as China announced import bans for several Australian exports including wine. The company also held its AGM yesterday and announced it is looking to delay its proposed Penfold’s demerger.
The Australian futures market points to a 0.68% rise today.
Overseas Markets
European sharemarkets closed higher on Thursday. Renewable energy companies had solid gains; Vestas Wind Systems and Siemens Gamesa added 7.2% and 5.1% respectively. By the close of trade, the broad based STOXX Europe 600 added 1.1%.
US sharemarkets rallied overnight, as investor sentiment lifted due to greater clarity on the presidential election outcome. Congress is likely to be split, with Republicans set to maintain control in the Senate, which should translate to the continuation of a favorable tax and regulatory environment.
All sectors finished in the black, led by the Materials and Information Technology sectors. PayPal and MasterCard added 5.3% and 3.0% respectively, while Visa rose 1.9%. Spotify rebounded from recent weakness, up 7.2%, while Apple, Microsoft and Facebook all lifted between 2.5% and 3.6%. Gaming companies Unity Software and Electronic Arts added 4.1% and 2.4% respectively. SolarEdge Technologies outperformed to climb 13.1%, while Waste Management gained 3.1% and water treatment company Xylem added 4.7%.
By the close of trade, the Dow Jones added 2.2%, the S&P 500 rose 2.3% and the NASDAQ gained 2.6%.
CNIS Perspective
The Bank of England (BoE) has voted to propel another £150 billion into the UK economy in 2021 in the form of government bond purchases. After a unanimous vote, the BoE agreed to keep interest rates unchanged at 0.1% and raise the total amount of quantitative easing from £745 billion to £895 billion, in a bid to boost spending in the face of concerns over COVID-19 and Brexit.
England re-entered a national lockdown on Thursday, with restaurants, bars and non-essential businesses closed until 2 December. Meanwhile, the UK reported its second-largest daily increase in COVID-19 cases on Wednesday, with over 25,000 new infections recorded in 24 hours. This lockdown and the unresolved talks relating to a post-Brexit trade deal with the European Union, has left the outlook for the UK economy looking "unusually uncertain", according to the BoE. Without an EU deal, UK-based companies face hefty tariffs, quotas and other barriers to doing business with the country's biggest export market from 1 January 2021.
The resurgence of the coronavirus ahead of the UK winter and fears over Brexit, has led to the likelihood of a ‘double-dip recession’ for the UK. After a strong third quarter, the central bank is now expecting the UK economy to shrink by 2% in the fourth quarter and 11% in 2020. Over the long run, scarring caused by the pandemic will reduce the country's economic output by roughly 1.75%.
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