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The ASX200 index dipped by 0.3 per cent or 23.4 points to close at 7,759.6 points, while the broader All Ordinaries index decreased by 20.1 points or 0.25 per cent, finishing at 8,002.8 points.
Among sectors, property emerged as the worst performer, with a 2.3 per cent drop. Interest-rate-sensitive financials also faced losses, trickling down to a 0.5 per cent fall at closing.
Leading the decliners were Judo Capital Holdings Ltd and GPT Group, end-of-day figures revealing drops of 6.72 per cent and 5.87 per cent respectively. This reaction underscores investors' anxiety regarding more possible interest rate hikes by the Reserve Bank of Australia (RBA).
IG analyst Tony Sycamore noted that the market has not yet fully absorbed Wednesday’s CPI shock, where inflation surged from 3.6 per cent to 4 per cent for the year ending in May.
"Yesterday’s high inflation numbers have kept the local market unsettled for another day," Mr. Sycamore remarked.
"The RBA's continuous apprehension over inflation, highlighted in mid-June when the Board discussed rate hikes and dismissed cuts, has been a design for market caution."
He added, "The RBA’s reiterated commitment to 'do what is necessary' to curb inflation back to target levels sounded notably more hawkish."
Additionally, the RBA's preferred inflation gauge, the Trimmed Mean CPI, rose to 4.4 per cent in May, beyond their anticipated 3.8 per cent forecast. This escalates the probability of a fourteenth rate hike to 4.60 per cent before year-end, barring an unforeseen sharp decline in June inflation data.
Peter Munckton, chief economist at Bank of Queensland, concurred, arguing that the CPI release would attract intense scrutiny.
"Weak real household disposable income is primarily driven by elevated inflation and the related higher interest rates," Mr. Munckton said.
"The May CPI outcome, leading a second poor monthly inflation figure in a row, demonstrates that the quarterly CPI figures, while more comprehensive, might align with the negative monthly trend."
He added, "Consequently, a consistent trend in the June quarter's CPI may compel the RBA to hike rates in their upcoming August meeting, making a rate move a toss-up at this stage."
The Aussie dollar traded at 66.8 US cents at 4:15 PM.
The source of the original article provided insights on ASX dynamics amidst the inflation-driven turmoil (NewsWire, June 27, 2024).
Published:Friday, 28th Jun 2024
Source: Paige Estritori
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