The Australian sharemarket pulled back from its session highs on Wednesday after fresh inflation data dashed hopes of a near-term interest rate cut, leaving the benchmark index clinging to modest gains despite a strong lead from Wall Street and a busy morning of corporate earnings.
The S&P/ASX 200 was up just 11.8 points, or 0.1 per cent, at 9176.40 as of late morning trade, extending a two-session winning streak but retreating sharply after the Bureau of Statistics released its latest monthly consumer price figures.
Inflation data rattles rate cut hopes
The Australian Bureau of Statistics reported that the monthly inflation rate eased to 3.5 per cent in July, down from 3.8 per cent in June — a step in the right direction, but not enough to satisfy markets. The more troubling number for the Reserve Bank was underlying inflation, which held steady at 3.6 per cent rather than easing as many had anticipated, representing a 0.5 per cent lift in the measure.
The result immediately lifted the Australian dollar, which rose to US71.81¢ as traders priced in a greater likelihood of a rate increase at the RBA's next board meeting in late September. Australia's inflation trajectory has remained a persistent headache for policymakers, and Wednesday's figures suggest the path back to the bank's target band remains uneven. For more context on how the outlook has shifted, see our earlier analysis on inflation easing pressure on the Reserve Bank.
Woolworths leads consumer staples higher on Ooshies boost
Among the session's standout performers, Woolworths surged 4.5 per cent after the supermarket giant reported that its Disney Ooshies collectables campaign had given its early financial year sales a notable lift. In the first eight weeks of the new financial year, food sales at its Australian supermarkets climbed 7.6 per cent, with the plastic figurine promotion estimated to have contributed up to two percentage points of that growth.
For the full year to June 30, food sales rose 4.6 per cent, helping Woolworths grow its net profit by 18.1 per cent to $1.14 billion. The company also lifted its final dividend to 52 cents per share, up from 45 cents a year earlier. Rival Coles, which earlier in the week flagged that its own sales had felt the sting of the Ooshies campaign, still managed to add 1.4 per cent.
Mining heavyweights also contributed early momentum, with BHP up 1.3 per cent and Rio Tinto up 1.4 per cent. Gold producers advanced as bullion traded around $US4,660 an ounce, close to a three-month high, supported by a drop in US Treasury yields. Evolution Mining gained 1.7 per cent and Newmont rose 2.4 per cent.
Nine Entertainment jumps on profit result
Nine Entertainment climbed 5.6 per cent after reporting a 7 per cent rise in full-year net profit from continuing businesses to $142.4 million, with revenue up 3 per cent to $2.19 billion despite a challenging advertising environment. The media company flagged a strategic pivot away from traditional broadcasting, pointing to growth in its subscription streaming and publishing arms, as well as at QMS, as key drivers of its future direction.
Energy stocks and Flight Centre drag on the index
Not all sectors shared in the optimism. Energy stocks were among the session's worst performers, with Woodside falling 4 per cent and Santos dropping 2.4 per cent after Brent crude slid 2.2 per cent to $US86.60 a barrel. The oil price decline came despite rising US-Iran tensions following new American sanctions, with Brent having swung widely between $US72 and $US102 the previous month amid on-again, off-again hopes for a deal to reopen tanker routes through the Persian Gulf.
Travel agent Flight Centre tumbled 5.8 per cent after disclosing that Middle East conflict had carved $60 million from its leisure profits in the fourth quarter. A wave of cancellations tied to the US-Israel conflict with Iran weighed heavily on the business, with underlying profit before tax falling to $278 million for the year to June.
