Inflation surprise halts Australian indices in their tracks

Surprisingly high inflation data stopped the Australian market from consolidating early gains on Wednesday, turning the day into a stalemate in terms of the indices. The benchmark S&P/ASX 200 closed 2.6 points lower, at 6,854, losing early gains. The broader All Ordinaries index, however, managed a 0.7-point gain, to 7,046.

Australia’s headline consumer price index (CPI) rose 1.2 per cent in the September quarter compared with April-June, the Australian Bureau of Statistics (ABS) reported. An economists’ survey had predicted a 1.1 per cent quarter-on-quarter rise, and the figure was up from 0.8 per cent.  The core CPI measure also rose 1.2 per cent for the quarter, against a forecast of 1.1 per cent. In annual terms, core inflation was up 5.2 per cent, against a forecast of 5 per cent.

The strong core inflation figure was widely construed as virtually locking-in a 25-basis-point rate rise at the Reserve Bank board’s November meeting.

Firmer iron ore prices bolstered the resources sector, with BHP gaining $1.13, or 2.6 per cent, to $44.72; Fortescue Metals Group up 67 cents, or 3.1 per cent, to $22.02; and Rio Tinto advancing $2.67, or 2.4 per cent, to $116.27. Canadian-based high-grade iron ore producer Champion Iron closed 27 cents, or 4.4 per cent, higher at $6.38.

Iron ore and lithium miner Mineral Resources gained $2.66, or 4.6 per cent, to $60.09 after reaffirming its FY24 volume guidance. IGO, which produces nickel and lithium, eased 2 cents to $10.85.

Lithium producer Pilbara Minerals rose 9 cents, or 2.4 per cent, to $3.88; while fellow producer Allkem appreciated 38 cents, or 3.7 per cent, to $10.56.

Rare earths producer Lynas Rare Earths was up 30 cents, or 4.4 per cent, to $7.12. Canadian-based uranium project developer NexGen Energy Canada gained 52 cents, or 5.8 per cent, to $9.43, while Namibian-based uranium producer Paladin Energy strengthened 1.5 cents, or 1.6 per cent, to 96.5 cents, and Boss Energy, which is re-starting the Honeymoon uranium mine in South Australia, gained 15 cents, or 3.3 per cent, to $4.69.

Green splash for Kogan among the red

Online retailer Kogan spiked 39 cents, or 8.7 per cent, to $4.86 after its sales returned to quarter-on-quarter growth, despite continuing to fall in annual terms.

Property fund manager Dexus dropped 23 cents, or 3.3 per cent, to $6.70 after long-serving CEO Darren Steinberg announced that he was stepping down after 11 years with the company.

Woolworths’ first-quarter sales rose 5.3 per cent compared with a year ago – the shares dipped 72 cents, or 2 per cent, to $35.63. Wagering luminary Tabcorp lost 3.5 cents, or 4.1 per cent, to 81.5 cents after suffering a 34 per cent protest vote over executive pay at its annual general meeting.

Investment management firm Magellan dropped 19 cents, or 2.9 per cent, to $6.34 after announcing that chief executive David George was stepping down with immediate effect. Board director Andrew Formica will assume the role of executive chairman as the company searches for a replacement.

It was a red day for the big banks, with ANZ down 33 cents, or 1.3 per cent, to $24.85; National Australia Bank losing 24 cents, or 0.8 per cent, to $28.32; Westpac weakening 8 cents, or 0.4 per cent, to $20.80; and Commonwealth Bank sliding 72 cents, or 0.7 per cent, to $97.35.

Biotech heavyweight CSL eased $1.20, or 0.5 per cent, to $236.05. Telstra was up 8 cents, or 2.1 per cent, to $3.87.

Alphabet spells trouble for Wall Street

In the US, the broad S&P 500 index gave up 60.91 points, or 1.4 per cent, to 4,186.77, the blue-chip Dow Jones Industrial Average shed 105.45 points, or 0.3 per cent, to 33,035.93, and the tech-heavy Nasdaq Composite index walked back 318.65 points, or 2.4 per cent, to 12,821.22. The Nasdaq was dragged lower by a 9.5 per cent slump in Google’s parent Alphabet, which put in it worst day since March 2020, after revenue in its Google cloud unit came well below analyst estimates.

A rash of earning reports came out after the closing bell, with Facebook’s parent Meta and IBM both beating earnings and revenue estimates.

In the bond market, the US 10-year yield rose 13.5 basis points to 4.961 per cent, while the 2-year yield ended 7.8 basis points higher at 5.145 per cent.

Gold strengthened US$9.43, or 0.5 per cent, to US$1,982.11 an ounce. The global benchmark Brent crude oil grade rose US$2.06, or 2.3 per cent, to US$90.13 a barrel, while US West Texas Intermediate oil retreated 16 cents, or 0.2 per cent, to US$85.23 a barrel.

The Australian dollar is buying 62.9 US cents this morning, down from 63.77 cents at the ASX close on Wednesday.