Hotter-than-expected US inflation print rattles bourse

With US inflation proving more stubborn than expected, traders are increasingly concerned rate cuts will be delayed.

The local sharemarket snapped a three-day winning streak on Thursday after hotter-than-expected US inflation data pushed traders to slash their rate cut bets.

At the closing bell, the benchmark S&P/ASX200 index shed 34.9 points, or 0.5 points, to 7813.6, while the broader All Ordinaries shed a similar amount to 8074.1.

The Australian dollar was buying US65.24c.

Stocks sank on Wall Street after fresh US inflation data came in hotter-than-expected for the third consecutive month, sparking fears that the Fed Reserve won’t cut rates anytime soon.

Traders are increasingly nervous that rate cuts could be delayed until the new year. Picture: AFP / NCA NewsWire

Following the surprise result, traders pulled back their rate cut betters, with the Fed now fully priced for a cut in November, while money markets ascribe 91 per cent chance that the Reserve Bank will deliver a 25 basis point cut at its December meeting.

“From the Fed’s perspective, it certainly provided them with no confidence that inflation is moving towards (their target of) two per cent in a sustained way for them to be able to initiate an easing cycle,” Perpetual’s head of investment Matt Sherwood said.

Mr Sherwood added he would be “shocked” should the RBA move to cut rates ahead of the Fed, and was sceptical of any easing at all this year.

“Wages growth is still accelerating, the cash rate is lower to begin with, and let’s not forget the fact that everyone’s getting very, very substantial tax cuts in July,” he added.

Concerns that the Reserve Bank will not move to cut interest rates this year pushed the real estate sector down 1.8 per cent.

Scentre slid three per cent to $3.24, Mirvac fell 2.6 per cent to $2.25 while Dexus lost 1.7 per cent to $7.52.

With three of 11 industry sectors finishing in the green, energy stocks were the strongest performers, adding 1.2 per cent at Brent crude traded above $US90 per barrel.

Woodside jumped 2.1 per cent to $30.59. Picture: NCA NewsWire / Sharon Smith

Sector heavyweight Woodside jumped 2.1 per cent to $30.59, Santos climbed 1.3 per cent to $7.84, while Beach Energy rose 1.3 per cent to $1.60.

In individual stocks, Northern Star Resources advanced 2.4 per cent to $15.36, its highest level since November 2020.

The gold miner is on track to sell 1.6 to 1.7Moz in FY24 according to its March quarter update.

Lithium miner Vulcan Energy vaulted 24.1 per cent to $3.55, after the firm successfully produced lithium chloride at its German facilities.

Rival battery minerals producer Core Lithium also rose 3.2 per cent to 16c after reporting a 58 per cent increase in its mineral resource estimate at its Finniss Project located in the Northern Territory.

Shares in tech sector heavyweight NextDC continued in a trading halt as it prepared to commence a capital raise worth $1.3bn. Shares last traded at $16.71.