April 25, 2024

Australian shares close largely flat; investors digest US CPI data

By Sherin Sunny

Jan 12 (Reuters)Australian shares closed largely flat on Friday, as losses in financials and consumer stocks countered gains in commodity stocks, while hotter-than-expected U.S. inflation data raised some doubts about early rate cuts from the Federal Reserve.

The S&P/ASX 200 index .AXJO closed 0.1% lower at 7,498.30. The benchmark logged a marginal 0.1% gain for the week.

Data released overnight showed U.S. consumer prices rose more than expected in December, with a closely watched core measure coming in slightly above consensus.

Markets were still pricing in a more than 73% chance for the Fed’s first rate cut to come in March.

“Our assessment is that both the inflation and labour market data published this year are not supportive of an early rate cut and we therefore suspect there is a significant risk of a market correction,” analysts at ANZ wrote in a note.

Earlier this week, data showed Australia’s inflation slumped to a near two-year low in November and core inflation also eased sharply.

“Looking further forward, the most recent US CPI release serves as a reminder that the return of inflation to more normal levels over 2024 is unlikely to be perfectly smooth,” ANZ analysts wrote.

They expect the Reserve Bank of Australia to stay on hold in February.

On the local bourse, energy stocks .AXEJ gained 0.5%, as oil prices rose more than 2% after the U.S. and Britain carried out strikes against Houthi military targets in Yemen. O/R

Sector majors Woodside Energy WDS.AX and Santos STO.AX gained 0.5% and 1.5%, respectively.

Gold stocks .AXGD advanced 0.6%.

Heavyweight financials .AXFJ closed 0.1% lower.

Consumer stocks .AXSJ declined 1.2% in their biggest daily drop since Oct. 30. Woolworths WOW.AX and Coles Group COL.AX lost 1.5% and 2.1%, respectively.

In New Zealand, the benchmark S&P/NZX 50 index .NZ50 rose 0.5% to 11,858.31. The benchmark gained 0.9% for the week.

(Reporting by Sherin Sunny in Bengaluru; Editing by Subhranshu Sahu)


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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