ASX drops as Woolworths and Coles slump after ACCC action

Welcome to your five-minute recap of the trading day.

The numbers

The Australian sharemarket has closed in the red, dragged down by consumer stocks, kicking off a week that is likely to be dominated by the outlook for Australian interest rates.

The S&P/ASX 200 dropped 56.60 points, or 0.69 per cent, to 8152.90 at the close, retreating from last week’s record highs. Coles and Woolworths both fell by more than 3 per cent after the competition watchdog launched legal action against the supermarket giants, alleging they misled customers through their discounts.

Wall Street was mixed on Friday.Credit: AP

The lifters

Boss Energy was a top performer, gaining 7.5 per cent, followed by Healius (up 7.4 per cent) and Deep Yellow (up 5.2 per cent). The strongest sector was energy, up 0.9 per cent, while utilities rose 0.8 per cent and information technology gained 0.3 per cent.

The laggards

The weakest sector on the local market was consumer staples, down 2.8 per cent, while consumer discretionary stocks fell 1.3 per cent.

The biggest decliners among the large-caps were Woolworths, which fell 3.4 per cent, followed by Spark New Zealand (down 3.3 per cent) and Coles (down 3.2 per cent).

Mining giant BHP fell 1.3 per cent, Rio Tinto fell 0.6 per cent, while the largest company on the ASX, Commonwealth Bank, slid 1.5 per cent.

Meanwhile, dairy processor Beston Global Food Company has suspended trading after announcing it had appointed KPMG as voluntary administrators, who are seeking buyers of expressions of interest to recapitalise the business.

“There are significant dairy processing assets across two sites, strong relationships with loyal dairy farmers throughout South Australia and into western Victoria and established distribution channels both domestically and globally,” said restructuring partner Tim Mableson.

The lowdown

Market strategist at trading platform moomoo Jessica Amir said the Reserve Bank’s interest rates decision on Tuesday will lay the foundation for the markets this week. Amir said there was pressure on the RBA to cut rates but that “we probably won’t get any cuts”.

“A lot of pressure is on the RBA to cut interest rates, which would cut pressure on Aussies who are struggling,” Amir said.

“Oil prices have come down considerably, container rates have come down, inflation has come down a lot, but the market thinks that inflation will come down to the RBA targets.”

The RBA decision is looming after the Australian Competition and Consumer Commission on Monday took action against supermarket giants Coles and Woolworths, alleging the companies misled customers through their discounts.

“Regulators have been looking into this for a long time, it was just a matter of time. Aussies have been expecting the biggest sellers of goods to get a slap on the wrist,” said Amir. “Retail investors haven’t been interested in the retailers; they aren’t expecting good returns, the costs are so high, rents are so high, and wages are where they are.”

With AP

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