Leah Gibbons | nabtrade
It is another down day for the Australian share market with the S&P/ASX200 retreating more than 1% in a broad-based sell off as investors continue to fret over yesterday’s hot CPI data which could see an RBA rate hike on the horizon.
NAB has revised its policy outlook expectations, pushing out its rate cut expectations to May 2024 from November this year. NAB’s Group Chief Economist Alan Oster says the mix of slow growth and gradual progress on inflation reflects the central bank’s decision to continue on a “lower for longer” approach. However, he added, with the progress on inflation slower than expected it is possible the Board will pivot and raise rates at tis August meeting, though flagged that path relies solely on the data.
The swaps market is currently pricing in a 40% chance of a 25bps hike in August, up from around 10% before that surprise inflation print.
Back to the markets response, interest-rate sensitive financials have tumbled to their lowest level in over a week, miners are down, while gold stocks dropped 1% to hit their lowest level since late March.
Australian listed real estate stocks are the worst performers in today’s trade, dropping 3% to touch their lowest level since early May.
In the commodity complex the price of iron ore futures have extended their rally for a third session buoyed by China’s latest efforts to kick start its struggling property market. The most-traded September iron ore contract on the Dalian Commodity Exchange is up nearly 2% in the Asian session.
Australian listed shares of Baby Bunting (BBN) have surged to see their best day since August 2023 as the company inks exclusivity agreements with baby gear designer Nuna Bab Australia and Bugaboo New Zealand as part of its brand strategy and reaffirms its FY24 outlook.
The stock however is down nearly 40% this year as of last close.
On the flip side, shares of Dexus (DXS) are eyeing their worst trading session in eight months as the real estate firm sells three assets at a combined value of AU$383.2 million dollars. The proceeds will initially be used to repay debt. Just last week the company flagged a 9% drop in portfolio valuations for the six-month to June-end.
Shares are down 12% this year as of last close.
Finally, Tamboran Resources (TBN) has priced its shares at US$24 each to raise $75 million in its debut in New York.
The proceeds are expected to fund the company’s activity in the Beetaloo basin in Darwin, expected to be one of the world’s most promising shale gas fields.
In the global arena, investors remain on high alert for a yen intervention as the US dollar soars to touch a 38-year high against the Japanese currency overnight. The euro has also hit its highest level since 1992 against the yen, as Japan’s top currency diplomat says authorities were “seriously concerned and on high alert”.
The big dollar is up 1.3% for the month and nearly 1.5% for the quarter as expectations for rate cuts in the US have been pushed back by sticky inflation and strong economic data.
No surprise, the yen is the worst performing G10 currency this year, down some 12% adding pressure on the Bank of Japan to raise rates.
More broadly Asian shares are lower as nervousness over global inflation keeps investors at bay.
MSCI’s broadest index of Asia-Pacific shares outside Japan again is lower, while Tokyo’s Nikkei 225 has slumped 1% giving up most gains in the previous session. Looking ahead, the technical test for the Japanese equity market is whether or not it can reclaim the May 20 high of 28.437 points by the end of the week.
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