(RETAILERS ARE BEING PUT THROUGH THE WRINGER IN AUSTRALIA)
April 1, 2024
Hello everyone.
Welcome to the month of April.
Week ahead calendar.
Monday, April 1
9:45 a.m. Markit PMI Manufacturing final (March)
10 a.m. Construction Spending (February)
10 a.m. ISM Manufacturing (March)
Tuesday, April 2
10 a.m. Durable Orders final (February)
10 a.m. Factory Orders (February)
10 a.m. JOLTS Job Openings (February)
Wednesday, April 3
8:15 a.m. ADP Employment Survey (March)
9:45 a.m. PMI Composite final (March)
9:45 a.m. Markit PMI Services final (March)
10 a.m. ISM Services PMI (March)
Thursday, April 4
8:30 a.m. Continuing Jobless Claims (03/23)
8:30 a.m. Initial Claims (03/30)
8:30 a.m. Trade Balance (February)
Earnings: Lamb Weston Holdings, Conagra Brands
Friday, April 5
8:30 a.m. March Jobs Report
3:00 p.m. Consumer Credit (February)
Higher wage bills, higher energy prices, and skyrocketing insurance premiums are just a few factors adding to the pressures experienced by retailers in Australia.
A survey conducted by the National Retailers Association (NRA) reveals deep concerns among business owners about trading conditions, sales growth, and profitability.
Among the findings, 42% of all respondents expected business performance to be worse than last year. Only 23% are expecting sales to be better in 2024, while 44% expect things to be worse, including 8% who expect trading conditions to be significantly worse.
Of those surveyed, just over half, 55%, expect a decline in year-on-year profits in the coming 12 months, while 15% expect profits to grow.
The cost of doing business is driving these results with 77% projecting overheads to worsen.
NRA director, Rob Godwin argues that “while everyone is rightly focused on the cost of living, high-interest rates and low consumer confidence have pushed retailers into a cost-of-trading crisis, putting Australia’s second-largest employer at risk.” Mr Godwin goes on to say that “unless these cost-of-trading issues are addressed urgently, the government can’t possibly hope to make any inroads on the cost of living.”
Magnificent Seven influence is waning on this market.
Cyclical sectors have picked up the slack – industrials, financials and energy stocks are all moving higher. These three sectors, along with information technology and communication services, outperformed the S&P500 during the first quarter. To see longevity in a bull market we need to see rotation. The fact that so many cyclical sectors – which tend to outperform when the economy is chugging along – have recently risen into record territory bodes well for the rally according to equity strategist, Bret Kenwell, at eToro.
However, small caps have continued to lag. The Russell 2000, an index of small-cap names, is still trading 12% below its record close from November 2021, according to FactSet data. The Russell 2000 (RUT) finished March at 2,124, a 3.2% gain for the month, bringing its year-to-date advance to 4.8%.
The Fed cutting interest rates will be fuel for small caps, and we may see that move later in the year.
Potential market-moving data is expected this Friday with the release of the March nonfarm payrolls report from the labour department. Economists polled by The Wall Street Journal expect 200,000 jobs to have been created, compared with 275,000 last month.
Cheers,
Jacquie