Pre-Open Data
Key Data for the Week
Key economic data released this week:
- Thursday - US - Initial Jobless Claims were 840,000 for the week ending 3 October, down 9,000 on the previous week. Continuing claims for benefits fell to 11 million in the week ended 26 September.
- Friday - AUS - Home Loans
- Friday - UK - Gross Domestic Product
- Friday - UK - Industrial Production
Australian Market
The Australian sharemarket rose for a fourth consecutive day on Thursday, up 1.1%, with gains across the majority of sectors. The Information Technology sector was the strongest performer, up 2.7%, led by solid gains by buy-now-pay-later companies; Zip Co and Afterpay rose 8.8% and 2.6% respectively, while Sezzle lifted 3.3% after the company reported third quarter results that showed the number of users tripled between July and September.
Health Care also outperformed yesterday; CSL gained 2.3% after the company announced pharmaceutical subsidiary, Seqirus, finalised a deal with the Federal Government for a possible COVID-19 vaccine from the University of Queensland. Cochlear and Ramsey Health Care also enjoyed gains, up 5.3% and 2.2% respectively.
The Financials sector also closed higher, lifted by gains across all the big banks; Westpac and ANZ rose 1.5% and 1.3% respectively, while NAB gained 0.9% and Commonwealth Bank added 0.8%. Superannuation provider, Netwealth, was one of the leading performers on the market, up 8.3%, after the company reported an 8.0% increase in funds under administration for the September quarter.
The Australian futures market points to a 0.2% rise today, driven by stronger overseas markets overnight.
Overseas Markets
European sharemarkets traded higher overnight. The Energy sector was the strongest performer; BP and Royal Dutch Shell both gained over 2.0% after oil prices rose. Travel and Leisure stocks also enjoyed gains; British Airways owner, IAG, jumped 10.3%, while Lufthansa rose 6.1% and easyJet added 2.3%. The broad based STOXX Europe 600 rose 0.8%, while the German DAX added 0.9% and UK FTSE 100 lifted 0.5%.
US sharemarkets also rose on Thursday amid hopes for additional fiscal stimulus. All sectors closed higher, with Energy the leader. Both Chevron and ExxonMobil enjoyed gains in response to a jump in oil prices, up 1.9% and 5.2% respectively. The Financials sector also outperformed; JP Morgan Chase added 2.0% and Bank of America gained 1.5%. Financial services traded mixed; MasterCard and Visa rose 0.5% and 0.3% respectively, while PayPal fell 0.8%. The Information Technology sector closed higher; Facebook lifted 2.2% and Alphabet gained 1.8%, while Fortinet added 0.8% and Microsoft rose 0.4%. International Business Machines Corp (IBM) jumped 6.0% after the company announced a spin-off of its Managed Infrastructure Services unit.
By the close of trade, the S&P 500 rose 0.8% and the NASDAQ gained 0.5%, while the Dow Jones lifted 0.4%.
CNIS Perspective
One of the most striking outcomes of the pandemic has been its acceleration of global trends. For example, while technology that allows individuals to work remotely has been around for some time, without the pandemic it may have taken another decade to fully mature into new ways of working. Today, this tech is essential and what seemed years away, is now a reality.
This rapid transformation has been mirrored in the investment world, with investors moving at pace towards alternative investment opportunities. With the outlook for global interest rates remaining low for the foreseeable future, investors are now seeking to deploy larger amounts of capital into potentially higher-yielding, higher-risk and more expensive asset classes. This has been reflected in the enormous inflows into private equity, hedge funds and cryptocurrency funds. Elsewhere, the emergence of SPACs (special-purpose acquisition companies) or so called ‘blank cheque’ groups that raise money into shell companies, have dominated the IPO space in 2020.
These moves into ‘alternative investments’ have led many market commentators to note that by keeping interest rates at, or close to zero, will not only adversely impact savers, but may encourage excessive risk-taking in the hunt for returns.
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.
