The Aussie sharemarket fell for the fourth straight day after the ASX 200 shed 1.3 per cent or 85pts, to 6601. The market remained cautious ahead of the US Federal Reserve’s decision on US interest rates tomorrow morning (4am AEST). All 11 sectors finished in negative territory, with the interest-rate sensitive Tech and Real Estate sectors down most. The Energy sector fell by 2.4 per cent and is now on track to snap a three week winning streak after oil prices decline from near 14-year highs.
The US Federal Reserve will make its interest rate decision early tomorrow morning. This comes after higher-than-expected inflation data was released last Friday. Traders are currently pricing in a 93.2 per cent chance of a 75 basis point hike, up from 3.9 per cent a week ago. This is despite Fed Chairman Jerome Powell announcing back-to-back 50 basis point rate hikes over the next two meetings (including tonight) in early May. Higher interest rates – which may see inflation being tamed – may come at the cost of an economic contraction.
In economic news overnight, the US producer price index (PPI) rose by 0.8 per cent in May to be up by 10.8 per cent on the year (survey: +10.9 per cent).
In Australia, the Fair Work Commission increased the national minimum wage by $40 to $812.60 per week or $21.38 per hour from July 1, 2022. The increase of 5.2 per cent is the biggest lift in percentage terms since the 5.7 per cent increase in 2006. The weekly ANZ-Roy Morgan consumer confidence index fell by 7.6 percent to 80.4. Sentiment is at the lowest level since early April 2020.
China released economic data for May. Retail sales fell annually by a softer-than-expected 6.7 per cent (survey: 7.1 per cent). Industrial production grew by 0.7 per cent over the year, despite expectations of a 0.9 per cent fall. Over the past quarter, China’s capital cities have faced tight Covid-19 restrictions.
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In company news today, Rio Tinto (RIO) has delivered first ore from its Gudai-Darri iron ore mine in the Pilbara, Western Australia. It expects production will continue to ramp up for the remainder of the year & ‘is expected to reach full capacity during 2023′. The mine has an expected life of more than 40 years. RIO has kept full-year shipments guidance for 2022 steady at 320-335 million tonnes.
The Australian Competition & Consumer Commission (ACCC) has started its informal review of Woolworths’ (WOW) ~$243m acquisition of online marketplace MyDeal.com.au (MYD). WOW offered to buy an 80.16 per cent stake in MYD on 20 May.
5.5bn shares were traded, worth $11.4bn. 440 stocks finished higher, 1,098 ended lower, while 324 closed unchanged.
The European Central Bank (ECB) will hold an ad hoc meeting tonight to discuss financial conditions.
Originally published by Divik Nigam – (Author) CommSec