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ASX extends losses as US rate decision looms

AUSTRALIAN ECONOMY
SYDNEY, AUSTRALIA - Newswire Photos: JUNE 11 2024: A general view of the digital boards at the Australian Stock Exchange in the Sydney CBD ahead of the NSW Budget being handed down next week. Picture: NewsWire / Gaye Gerard

A broad sell-off across the sharemarket pushed the benchmark into the red for a second consecutive session on Wednesday, as investors anxiously awaited key news out of the US.

The double bill of fresh US inflation data and the Federal Reserve’s interest rate decision are due early on Thursday (AEST).

By the closing bell, the S&P/ASX200 slumped 0.5 per cent, or 39.9 points, to 7715.5, while the All Ordinaries shaved off a similar amount of its value, slipping to 7963.1.

The Australian dollar was buying US66.20c at 4.30pm.

Before Thursday’s opening bell, the US May consumer price report will be released, with analysts looking for signs that underlying inflation will have eased, bolstering the chance of rate cuts by the Fed.

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While interest rate futures infer a near-zero chance that the Fed will move to loosen monetary policy, investors will also be closely watching the rate forecasts of Fed officials for clues on the path of rate cuts.

The share market extended its losses on Wednesday ahead of the Federal Reserve’s interest rate call. Picture: Supplied.
The share market extended its losses on Wednesday ahead of the Federal Reserve’s interest rate call. Picture: Supplied.

The most recent projections in March showed a narrow majority of Fed officials expected three rate cuts by year’s end. That average is expected to drop to one or two cuts, depending on Thursday’s inflation reading.

“(Fed chair) Jerome Powell has been very clear that the Fed will be data dependent,” NabTrade’s head of investor behaviour Gemma Dale said.

“What the market is most concerned about is if the data shows a meaningful re-acceleration in inflation.

“It would appear that (Powell’s) strong desire not to hike will only be tested by the data.”

On the ASX, interest rate sensitive tech shares were among the worst performers, slumping 1 per cent, with sector heavyweight Wisetech off 2.7 per cent to $96.93.

Miners also weighed on the benchmark, slipping 0.7 per cent, as iron ore futures on the Singapore exchange traded at $US104.75 a tonne amid ongoing pessimism about recovery of China’s ailing property sector, a key driver of demand for the key steelmaking ingredient.

Heavyweight iron ore miners finished lower with BHP off 0.6 per cent to $43.50, Fortescue down 1.3 per cent to $23.29, while Rio Tinto fell 1.5 per cent to $121.04.

Iron ore miners slipped lower as miner for the key steelmaking ingredient traded below $US105 a tonne. Picture: Supplied.
Iron ore miners slipped lower as miner for the key steelmaking ingredient traded below $US105 a tonne. Picture: Supplied.

Meanwhile, financials traded 0.4 per cent lower, with CommBank down 0.7 per cent to $124.10, NAB off 0.4 per cent to $34.74 and ANZ 0.5 per cent lower to $28.78. Westpac, however, edged higher, adding 0.1 per cent to $26.71.

Energy stocks was the sole industry subindex to rise, adding 1 per cent, with the sector supported by Woodside which added 2.6 per cent to $27.79 after analysts at Macquarie upgraded the oil and gas giant to an “outperform” rating.

In individual stocks, shares in automotive parts retailer Bapcor extended their gains following a $1.8bn takeover bid from private equity firm Bain Capital. Shares finished up 1 per cent to $5.02.

Supercheap Auto, Rebel Sport and BCF parent Super Retail Group slipped 1.1 per cent to $13.07 as it named Fonterra executive Judith Swales as its new chair, replacing Sally Pitkin.