Aussie shares edge higher as April inflation eases
The Australian share market shrugged off an early wobble after April inflation came in colder than expected, raising the prospect that the Reserve Bank will opt to raise interest rates at its June meeting.
The S&P/ASX200 was up 8.5 points at midday trading on Wednesday, up 0.11 percent to 8,667.2 points, while the broader All Ordinaries Index fell 16.1 points, or 0.18 percent, to 8,898.7 points.
April’s headline consumer price index figure stood at 4.2 percent over the 12-month period; This is below the 4.4 percent expected and down from 4.6 percent in March.
The central bank’s preferred shortened average measure rose slightly to 3.4 percent, but both figures remain outside the central bank’s 2-3 percent target range.
Financial stocks held the index back from significant gains; the heavy sector fell 1.2 percent, with even bigger losses for the big four banks; Westpac fell two per cent after issuing a $26 million fine to regulators for failing to respond to customer distress reports.
The base materials sector improved by more than one per cent thanks to strong leads from South32 and Lynas Rare Earths, while mega-miners BHP and Fortescue also made progress.
Gold miners maintained a generally positive outlook as the precious metal remained near US$4,500 ($A6,285) per ounce.
Energy stocks rose as Brent crude rebounded overnight before falling to $95.90 a barrel as tensions rose in the Middle East and both Iran and the United States downplayed hopes of an imminent deal.
Ebury economist Anthony Malouf said volatility in oil prices could continue for some time as the situation in the Persian Gulf remains volatile and major players are at odds over the Strait of Hormuz, Iran’s nuclear ambitions and frozen assets.
“Even if some kind of agreement were to be reached, experts have noted that a full nuclear deal could require months of further negotiations, given the technical complexity,” he said.
Consumer discretionary shares rose 0.8 per cent as the odds of a fourth consecutive rate cut by the RBA faded, driven by decent moves from JB Hi-Fi, Super Retail and Harvey Norman.
Eagers Automotive fell 2.2 percent after supply chain concerns clouded its positive earnings outlook.
In other company news, Dan Murphy’s and BWS owner Endeavor fell three percent to a record low of $2.95 after flagging plans to cut costs by $300 million over three years and exit most of its winery business.
Gina Rinehart took an indirect stake of more than nine percent in Southern Cross Media after Hanrine Finance, owned by Hancock Prospecting, lent Bruce McWilliam tens of millions of dollars to finance his investment in the media company.
Two companies have been shortlisted to take over the troubled Whyalla steelworks; M Resources and India’s Jindal Steel emerged as the final bidders.
The Australian dollar is buying 71.57 US cents, down slightly from 71.65 US cents at 5pm on Tuesday.
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