10 April 2023 | Weekly Snapshot

Did you know?

Whilst Easter is a popular time for chocolate consumption, it actually comes in second to Halloween which makes up 10% of over $30 billion in annual U.S chocolate sales.

Market Movements

Australian Share Market (ASX 200) – up 0.57% for the 2nd week in a row in a shortened trading week. The Healthcare sector (+3.83%) led the gains followed by Energy (+2.23%) and Consumer Staples (+1.78%). Gains were broad based with Materials (-2.72%) the only sector lower and limiting the index gains. The oil price rallied the most in a year, boosting energy stocks following a surprise OPEC+ production cut totalling more than 1.6M barrels per day announced early in the week with analysts raising their oil price targets following the announcement. CoreLogic reported that their National Home Value index rose 0.6% for the month in March, snapping a 10-month losing streak for Aussie house prices with the report noting below average supply, tight rental markets, and record net overseas migration were supporting prices despite the rate hikes. The Department of Industry’s latest Resources and Energy quarterly report showed Australian commodity export revenue is forecast to hit to a new record $464 billion this financial year (FY23), up from the $459 billion predicted last quarter powered by LNG exports that are tipped to hit $91 billion, with iron ore revenue projected to hit $121 billion. The ASX 200 index was up 7 sessions in a row by mid-week, up around 5% from the March low after falling into oversold territory after 7 straight weeks of declines throughout February and March. The highlight of the week was the Reserve Bank of Australia leaving the cash rate on hold at 3.6% as expected. It was consistent with the meeting minutes last month that said they were going to consider a pause with the decision to allow time to assess the impact of the tightening to date. They also softened their guidance on future rate hikes in what was a dovish statement. The RBA now expects “some” further tightening “may well be” needed, a step down from last month’s statement that said the RBA “expects” further tightening “will be” needed. Their information suggests that inflation has peaked, and viewed the recent banking dramas as an additional headwind to the global economy but did acknowledge wage growth pressures from the tight labour market.


U.S. Share Market (S&P 500) – down 0.10%, with the Dow (+0.63%) and Nasdaq (-1.10%) mixed. Economic data started coming in a bit softer than expected after surprising to the upside for much of 2023. The March ISM services index came in weaker than expected after Services had been doing much of the economic growth heavy lifting recently. The ISM manufacturing report was also weaker than expected and remained in contraction territory with no signs of improvement yet. The February JOLTS report saw a bigger than expected drop to 9.93 million job openings, well below consensus for 10.4 million and last month’s 10.82 million. It was the lowest reading since June 2021 and will likely add to the case for Fed pause but is still high historically with U.S job openings around 7 million pre pandemic. Fallout from the mini banking crisis is now being measured with a report from the Federal Reserve showing the last two weeks of March saw the largest contraction in commercial lending on record. Almost $105 billion in loans were erased (loans were repaid without new lending to offset the decline) suggesting new lending ground to a halt during that period. The Federal Reserve’s data only goes back to 1973 but to put into perspective is less than 1% of to the $12 trillion in total commercial loans outstanding. Nonfarm payrolls on Friday night rose by 236K jobs in March led by leisure and hospitality, and in line with estimates for a 240K gain. The Q1 monthly average of 345K jobs was another strong quarter for job gains. Average hourly earnings rose 0.3% for the month, also in line however the year on year increase moderated to 4.2% from 4.6% last month, the softest since June 2021. And the NY Fed’s Consumer Expectations report showed one year inflation expectations unexpectedly rising 0.5% to 4.7%, the first rise in inflation expectations in five months. The S&P 500 closed the week slightly lower but is up about 7% from the mini banking crisis lows in mid-March and trading near 8-month highs ahead of the Q1 earnings season that gets underway later this week.

Portfolio Movements

Johnson & Johnson (JNJ) agrees to $8.9 billion settlement for talc / cancer claims. Johnson & Johnson announced last week they have agreed to pay almost $9 billion to settle tens of thousands of historical lawsuits alleging its talc caused cancer, due to contamination with asbestos. J&J has always denied the allegations, saying decades of scientific testing and regulatory approvals have shown its talc to be safe and asbestos-free. The issue re-emerged in January and has been weighing on the stock since. The company said they believe that these claims are specious and lack scientific merit, but resolving the matter was in everyone’s best interests with the shares gaining 4% on the news.


Linde (LIN) signs agreement with ExxonMobil for carbon dioxide off-take. Linde announced last week that it has signed a long-term agreement with ExxonMobil for the off-take of carbon dioxide associated with Linde’s new clean hydrogen production in Beaumont, Texas. Linde previously announced that it will build, own and operate its own on-site complex. Under the agreement, ExxonMobil will transport and permanently store up to 2.2 million metric tons of carbon dioxide each year from Linde’s hydrogen production facility, equivalent to the emissions from nearly half a million cars per year. “As one of the world’s leading industrial gases and engineering companies, Linde is playing a key role in the clean energy transition. The company is actively supporting its customers to decarbonize their operations with the latest technologies for clean hydrogen and carbon capture, and by leveraging its world-class engineering organization, its existing hydrogen infrastructure and operational expertise” the company said.


Sonic Healthcare (SHL) announces acquisition of German Diagnosticum Group. Sonic Healthcare announced last week they are acquiring the Diagnosticum group of laboratories, one of the largest clinical and anatomical pathology laboratory groups in the South East of Germany. Diagnosticum is expected to generate revenues of €65 million in FY2024. The purchase price of €190 million will be funded from Sonic’s existing cash and debt facilities, with the majority of the purchase price being tax deductible in Germany over 15 years as goodwill amortisation. The transaction is immediately earnings per share (EPS) accretive and the return on invested capital (ROIC) will exceed Sonic’s cost of capital according to the announcement.

The Week Ahead

Domestic economic data releases this week include NAB Business Confidence today and Consumer Inflation Expectations on Thursday. Also Thursday is the highlight of the week with the March Labour Force data where a 23.5K jobs gain is expected and the unemployment rate to hold steady at 3.5%.

International highlights include China Loan growth, CPI and PPI today with Eurozone Retail Sales tonight. The highlight of the week is the U.S CPI data tomorrow night with annual headline Inflation expected to fall to 5.2% from 6% last month. Core CPI is expected to remain elevated, rising from 5.5% last month to 5.6% in March. The FOMC minutes are to be released on Thursday morning, Chinese Import and Export data is due during the day, with U.K GDP, Industrial and Manufacturing Production, Eurozone Industrial Production and U.S PPI on Thursday night. Friday night sees U.S Retail Sales, Capacity Utilization, Industrial and manufacturing Production, Business Inventories and Michigan Consumer Sentiment.

Corporate reporting starts to ramp back up this week Citigroup and other large U.S banks getting the Q1 reporting season underway on Friday night.

Saward Dawson Wealth Advisors Pty Ltd, a Corporate Authorised Representative of Akambo Pty Ltd t/a Accountants Private Advice

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