- Australian shares fell to a three-week low on Wednesday, dragged down by heavyweight financial stocks.
- Investors awaited April consumer inflation numbers to gain more clarity on the monetary policy path.
- “The S&P/ASX 200 index was down 0.7% at 7,711.50 by 0039 GMT,” according to market data.
Australian shares hit a three-week low as financial stocks drag, with inflation data in focus.
Australian Shares Decline Amid Financial Sector Weakness
On May 29, Australian shares experienced a significant drop, reaching a three-week low. The S&P/ASX 200 index fell by 0.7% to 7,711.50 by 0039 GMT, following a 0.3% decline the previous day. This downturn was primarily driven by losses in the financial sector, as investors remained cautious ahead of the release of April consumer inflation data.
Impact of Retail Sales Data on Market Sentiment
Recent data indicated that Australian retail sales grew in April, albeit at a very slow pace. This sluggish growth suggests that consumers are spending less due to high borrowing costs and rising rents. The anticipation of the April inflation reading, expected to show a slight dip to 3.4% from 3.5% in March, added to the market’s cautious sentiment.
Sector Performance: Financials, Mining, and More
Rate-sensitive financial stocks dropped by 1%, with the “Big Four” banks experiencing declines between 1.1% and 1.4%. The mining sector also saw a marginal decline of 0.1%, with major players like Fortescue and Rio Tinto retreating by 3.3% and 1.1%, respectively. BHP Group remained largely flat as it approached a deadline for a potential offer for Anglo American.
Technology and Healthcare Sectors Under Pressure
Technology and healthcare stocks were not immune to the broader market decline, falling by 0.5% and 0.7%, respectively. However, gold stocks bucked the trend, advancing by 0.4% as bullion prices rose due to a weaker dollar ahead of U.S. inflation data.
Energy Sector Gains Amid Oil Price Rise
Energy stocks saw a modest increase of 0.1%, driven by a rise in oil prices, which gained more than $1 per barrel. This increase was fueled by expectations that OPEC would maintain crude supply curbs at its upcoming June 2 meeting.
New Zealand Market Shows Resilience
In contrast to the Australian market, New Zealand’s benchmark S&P/NZX 50 index rose by 0.4% to 11,731.45, recovering from three consecutive sessions of losses. This resilience highlights the varying market dynamics within the region.
Conclusion
The Australian stock market faced a challenging session, with significant declines in the financial and mining sectors. Investors are closely monitoring upcoming inflation data, which will provide further insights into the monetary policy outlook. While some sectors like energy and gold showed resilience, the overall market sentiment remains cautious. Moving forward, the focus will be on how inflation trends and monetary policy decisions impact market performance.
