ASX closes lower amid signs of spending slowdown
By Najma Sambul
Welcome to your five-minute recap of the trading day and how experts saw it.
The numbers:
The Australian sharemarket closed lower on Tuesday as more interest rate rises loomed large and retail sales figures showed signs of a slowdown.
The S&P/ASX 200 dropped 10.9 points, or 0.15 per cent, to 7470.80 at the close.
The lifters:
Consumer staples and healthcare lifted the bourse with Woolworths and Coles gaining 3.48 per cent and 2.54 per cent, respectively. Medical equipment company ResMed surged close to 2.5 per cent.
The laggards:
IT (down 1.55 per cent) and real estate (down 1.05 per cent) were among the losers, although most industries including materials and energy were slightly down. Seek and Wisetech Global took a tumble, with Seek ending the day 0.74 per cent lower.
Among the miners, Lynas Rare Earth minerals took a 3.3 per cent hit after spending Monday in the green. However, the heavyweight miners, BHP, Rio Tinto and Fortescue, all finished higher.
NAB and Westpac were the two big four banks ending Tuesday with a slight dip of 0.13 per cent each.
The lowdown:
The retail spending high seems to have come to a humble end. The Australian Bureau of Statistics retail trade data released on Tuesday showed a weaker than expected 3.9 per cent slump in December spending.
However, investors shouldn’t fret, says retail analyst Craig Woolford from MST Marquee.
“We don’t see retail falling off a cliff,” Woolford said. “The growth rates will return to low single digit come February-March this year, and could continue to fade further through the calendar year particularly as price inflation drops away.”
While investors could be consoled by the news, Woolford said it would still take a while before significant impacts of inflation are felt in the sector. Deutsche Bank economists have predicted the Reserve Bank’s cash rate will hit 4.1 per cent by August to tackle inflation.
“It takes about 15 months for an interest rate hike to start impacting retail spending trends because higher income growth is strong,” Woolford said.
Meanwhile, the looming interest rate rise announcement by the US Federal Reserve Bank on Wednesday has rattled Wall Street as it prepares for a week full of potentially market-moving events, including earnings reports from the biggest US companies, including Apple, Google and Meta.
The S&P 500 dropped 1.3 per cent, giving back some of the gains that had carried it last week to its highest level since early December. The Dow Jones Industrial Average fell 260 points, or 0.8 per cent, while the Nasdaq composite sank 2 per cent.
Central banks for Europe and for the United Kingdom are also set to announce their latest increases for rates this week.
Quote of the day:
Strategists at Morgan Stanley led by Michael Wilson warn tougher times may be ahead.
“The reality is that earnings are proving to be even worse than feared based on the data, especially as it relates to margins,” they wrote in a report. “Secondly, investors seem to have forgotten the cardinal rule of ‘Don’t Fight the Fed’. Perhaps this week will serve as a reminder.”
Tweet of the day:
In case you missed:
Shares in consumer lender MoneyMe soared 64 per cent to 46 cents after the fintech reported first-half profit of $8 million, compared with a $19 million loss in the same period last year. The fintech also lifted its guidance for gross revenue for the full year, from $200 million to $220 million.
with AP
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Source: Thanks smh.com