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ASX drops ahead of RBA rate call; Wall Street falls as oil pares gain

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Consumer discretionary stocks dragged down the Australian sharemarket on Tuesday, with all eyes on the RBA’s rate decision in the afternoon.

The S&P/ASX 200 dropped 52.7 points, or 0.7 per cent, to 7163.6 in early trade, as all sectors except information technology and utilities traded in the red. The local bourse also had a negative lead from Wall Street, where stocks drifted lower overnight after several weeks of gains.

Markets are putting the chance of another interest rate rise at the RBA’s meeting to 50:50 after last week’s larger than expected 5.75 per cent increase in award-linked wages, a rise in the volatile monthly measure of inflation and data showing a jump in capital city house values.

Stocks on Wall Street declined overnight.Credit: Bloomberg

While consumer stocks (down 1.7 per cent) were the top performers on Monday, the possibility of an interest rate hike and its effects on consumer spending weighed on stocks such as Wesfarmers (down 2.1 per cent), Aristocrat Leisure (down 1.7 per cent) and IDP Education (down 1.4 per cent).

Financials (down 1 per cent) also dropped, with all four major banks trading down and the ASX (down 7.8 per cent) becoming the biggest large-cap decliner after cutting its dividend payout ratio.

Real estate investment trusts (REITS, down 1.1 per cent) were also weaker as Mirvac (down 1.5 per cent), Charter Hall Group (down 1.8 per cent) and Goodman Group (down 1 per cent) slipped.

On the flip side, utilities (up 0.2 per cent) bolstered the local bourse, with Origin Energy (up 0.5 per cent) and AGL (up 0.4 per cent) both lifting, as investors sought safety in their annuity-style earnings ahead of a possible rise in the interest rate.

Coal miners Whitehaven (up 3.1 per cent) and Yancoal (up 1.8 per cent) advanced along with fertiliser and explosives manufacturer Incitec Pivot (up 2.2 per cent), with the latter announcing that its chief executive will be stepping down.

Overnight on Wall Street, tech shares led the S&P 500 down 0.2 per cent with Apple erasing gains of as much as 2 per cent ahead of the unveiling of its new mixed-reality headset. Oil majors Chevron and Exxon Mobil also slipped after rallying earlier on higher oil prices following a Saudi Arabia supply cut.



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