THE sharemarket closed lower yesterday after the release of worse than expected inflation data and as the US debt ceiling stalemate continued.
The benchmark S&P/ASX 200 Index was down
35.9 points, or 0.78 per cent, at 4537.4. while the broader All Ordinaries Index dropped 33.7 points, or 0.73 per cent, to 4,612.6.
On the ASX 24, the September share price index futures contract fell 30 points to 4512 points, on volume of 27,963 contracts.
RBS Morgans private client adviser Bill Bishop said the release of unexpectedly high inflation data had dented the market.
The consumer price index rose 0.9 per cent in the June quarter, taking the annual rate of inflation to 3.6 per cent, from 3.3 per cent.
"The CPI is now outside the RBA's target band
[of 2-3 per cent]," Mr Bishop said.
"It's up 0.9 per cent, and annualised it is 3.6 per cent . . . it introduces a whole new ball game. People see all this bad news from overseas and they're not sure what's happening here."
He said intensifying concerns about the US debt-ceiling deadlock had also weighed on the market.
The White House and its divided Republican foes have failed to break an impasse that could see it default on its debt.
Politicians in Washington now have less than a week before the US hits the August 2 deadline to raise the $US14.3 trillion ($A13.1 trillion) debt ceiling.
In local trade, materials and resource stocks had a rough day, with Mirabela Nickel the worst performer in the top 200 stocks.
The Perth-based miner's shares dropped 17?, or 8 per cent, to $1.95, despite the company boosting nickel production at its flagship Brazilian mine by 20 per cent in the June quarter.
BHP Billiton finished down 52? at $43 while Rio Tinto was down 40? at $82.59.
The spot price of gold in Sydney closed at $US1624.45 an ounce, up $US10.45. Newcrest Mining gained 32?, or 0.8 per cent, to $40.50.
Banks and financials were down, with Westpac the worst hit. It fell 34?, or 1.6 per cent, to $21.02. NAB was down 37? at $24.45, ANZ fell 27? to $21.28 and CBA slipped 40? to $49.82.
Telstra eased 1? lower, or 0.33 per cent, to $3.02.
National turnover was
2.1 billion shares, worth
$5.2 billion, with 426 shares up, 632 down, and 381 steady.
The dollar hit a 28-year high after stronger than expected inflation figures raised expectations of an interest rate rise. At the close at was at $US1.1055, adding more than US1? from $US1.0931 on Tuesday.
Frequently Asked Questions about this Article…
Why did the ASX 200 and All Ordinaries close lower yesterday?
Markets fell after worse-than-expected inflation data and a US debt-ceiling stalemate. The S&P/ASX 200 closed down 35.9 points (0.78%) at 4,537.4 and the All Ordinaries dropped 33.7 points (0.73%) to 4,612.6 as investors reacted to the CPI surprise and political risk in Washington.
How did the June-quarter CPI print affect interest rate expectations and the RBA target band?
The consumer price index rose 0.9% in the June quarter, taking annual inflation to 3.6% from 3.3% — now outside the RBA’s 2–3% target band. That stronger-than-expected CPI lifted expectations of a possible interest-rate rise and contributed to market volatility.
What is the US debt ceiling issue and why should Australian investors care?
US lawmakers remained deadlocked ahead of the August 2 deadline to raise the $US14.3 trillion debt ceiling. The prospect of a US default or prolonged political wrangling raised global risk sentiment and weighed on Australian markets, adding to investor caution.
Which materials and resources stocks were hit hardest, and what happened to Mirabela Nickel?
Materials and resource stocks had a rough day. Mirabela Nickel was the worst performer in the top 200, falling about 8% to $1.95 even though it boosted nickel production at its Brazilian mine by 20% in the June quarter. Major miners also eased, with BHP Billiton finishing around $43 and Rio Tinto at $82.59.
How did gold and Newcrest Mining perform amid the market weakness?
The spot price of gold in Sydney closed at US$1,624.45 an ounce, up US$10.45. Newcrest Mining gained 0.8% to $40.50, benefiting from the stronger gold price on the day.
What happened to the big banks and Telstra during the sell-off?
Banks and financials were down overall. Westpac was the worst hit among majors, falling 1.6% to $21.02. NAB was at $24.45, ANZ fell to $21.28 and CBA slipped to $49.82. Telstra eased about 0.33% to $3.02.
What were the trading volumes and market breadth figures investors should note?
National turnover was 2.1 billion shares worth about $5.2 billion. Market breadth showed 426 stocks up, 632 down and 381 steady, indicating broad-based weakness on the session.
What should everyday investors monitor after this inflation- and debt-driven market move?
Keep an eye on upcoming inflation data (CPI), developments in US debt-ceiling negotiations and interest-rate signals from central banks, plus commodity prices and the Australian dollar — all were key drivers of the session described in the article.
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