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Stocks inch higher on depressed retail sales

The ASX inched higher on Tuesday following a surprise slump in retail sales for March. Picture: NCA NewsWire / Christian Gilles
The ASX inched higher on Tuesday following a surprise slump in retail sales for March. Picture: NCA NewsWire / Christian Gilles

The Australian sharemarket inched higher on Tuesday after a surprise slump in retail sales allayed fears of possible Reserve Bank rate hikes.

The benchmark ASX 200 edged up 0.35 per cent, or 26.7 points, to finish at 7664.10, while the broader All Ordinaries index lifted 0.32 per cent, or 25.4 points, to close at 7932.

Technology stocks slipped 0.1 per cent to close at 3014.8.

March retail sales data from the ABS showed a 0.4 per cent fall in spending across the month, well below economists’ expectations of a 0.2 per cent increase.

Consumers spent $151m less in March compared to the month prior, bringing total turnover to $35.7bn.

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IG market analyst Tony Sycamore said the depressed figures would reduce the probability of rate hikes, which the market had begun to price in following recent hotter-than-expected inflation and job market reports.

“The market swung from pricing in rate cuts to pricing in about a 50 per cent chance of a rate hike in September,” he said.

“Now that probability has eased to about 25 per cent after that retail sales number so the market is getting pushed back and forward a little bit and that is partly due to the fact the RBA hasn’t been willing to provide forward guidance.

“If (Reserve Bank governor) Michele Bullock was thinking about hiking rates after last week’s inflation data, that number today will probably cause her to have second thoughts.

GENERICS THIS WEEK
Australian shares ended in the green on Tuesday after a surprise slump in retail sales pushed back fears of rate hikes. Picture: NCA NewsWire / David Crosling

“I think the outcome of that means the RBA keeps rates on hold next week.

“They may instigate a tightening bias but I really don’t think they want to tighten rates, so that will be front and centre from today’s number.”

Eight of 11 industry sectors ended in the green, led by discretionary stocks with a 0.79 per cent gain.

Industrials, utilities and IT stocks booked losses, led by industrials with a 0.53 per cent fall.

The Aussie dollar lost 0.78 per cent against the greenback to buy US65.1c at the closing bell.

The small uplift followed a good session on Wall Street overnight on Monday, which saw the Dow Jones close up 0.38 per cent, the S and P 500 index finish up 0.32 per cent and the tech-heavy Nasdaq lift 0.35 per cent.

The big miners posted mixed results, with BHP closing up just 0.14 per cent to finish at $43.03 a share, giving up an intraday rise of some 0.5 per cent.

The behemoth announced it had proposed a $39.4bn settlement with the Brazilian government over the 2015 Samarco dam disaster.

Rio Tinto fell 0.37 per cent to close at $130.49 while Fortescue jumped 1.48 per cent to finish at $26.05.

The benchmark ASX200 edged up 0.35 per cent in the day. Picture: NCA NewsWire / Christian Gilles
The benchmark ASX200 edged up 0.35 per cent in the day. Picture: NCA NewsWire / Christian Gilles

The big banks gained ahead of trading updates in early May from NAB, Macquarie, Westpac and ANZ.

Commonwealth Bank lifted 0.61 per cent to end at $114.54 a share, Westpac rose 0.78 per cent to close at $25.96, NAB gained 0.54 per cent to end at $33.80 and ANZ edged up 0.32 per cent to finish at $28.16.

In corporate news, lithium miners boomed across the day, with Arcadium Lithium jumping 8.39 per cent to $6.72 a share and IGO lifting 7.33 per cent to $7.91.

Azure Minerals leapt 8.21 per cent to $3.69 on FIRB approval of a takeover bid from SH Mining.

Petroleum company Ampol fell 3.34 per cent to $36.81 after reporting a 7.3 per cent fall in refinery production for the first quarter of FY24.

Central Queensland thermal coal miner TerraCom slumped 9.26 per cent after reporting lowered quarterly production and sales from its flagship Blair Athol mine.

The top gainer on the ASX200 was Arcadium while the biggest laggard was engineering firm Worley, which fell 7.48 per cent to $15.09 a share after announcing Dubai infrastructure group Sidara had sold a 19 per cent stake in the company.