Weak retail sales boost rate cut hopes as ASX climbs on Friday

A bounce in the major banks and consumer staples in trading on Friday has helped drive the ASX to its best month since January.

Australia’s sharemarket rose for the second consecutive month in May, as traders dial up the chances of a rate cut in July following weaker than expected retail sales.

The benchmark ASX 200 index gained 24.90 points or 0.30 per cent on the final day of trading for May.

Australia’s major index has closed up 3.8 per cent in May which is the best monthly gain since January.

Meanwhile the broader All Ordinaries also finished higher up 22.50 points or 0.26 per cent to finish the month at 8,660.30.

The Australian dollar slipped 0.28 per cent during Friday’s trading and is now buying 64.26 US cents.

The ASX had its best month since May. Picture: NewsWire / Jeremy Piper

On an overall positive day for the market, seven of the 11 sectors finished in the green, led by consumer staples, utilities and financials.

The bounce in consumer staples was led by Treasury Wine Estates up 4.07 per cent to $8.44, while the A2Milk Company rose 3.35 per cent to $8.33.

The two major supermarkets also finished in the green, with Woolworths gaining 0.70 per cent to $31.85 while Coles eked out a gain of 0.28 per cent to $21.60.

All four of the major banks also finished higher during Friday’s trading.

Westpac led the charge gaining 2.68 per cent to $32.56, NAB gained 1.33 per cent to $38.00, CBA jumped 0.87 per cent to $175.95 and ANZ finished higher up 0.41 per cent to $29.04.

The gains come despite other Asian markets slumping on the back of the White House winning an administrative stay on the blockage of most of its tariffs by the US Court of International Trade.

Capital.com senior financial market analyst Kyle Rodda said the US market gave back its gains after the tariff news was announced.

“The caution reflects the fact that although market sentiment has been supported by the prospect of the judiciary halting arguably Presidential overreach with tariffs and trade policy, the decision marks the beginning of a new source of uncertainty rather than the total closure of another,” he said.

Seven of the 11 sectors finish in the green. Picture: NewsWire / Max Mason-Hubers

Australia’s sharemarket however was lifted on the back of weaker than expected retail sales.

While this is bad for some businesses, the money markets factored in a greater chance of a rate cut in July following the announcement that retail sales fell 0.1 per cent over the month of April compared with expectations of a 0.3 per cent rise.

AMP chief economist Shane Oliver said the results were surprising given Queensland was coming off a low base due to ex-Cyclone Alfred as well as most Aussies benefiting from a double Easter/Anzac Day long weekends.

“Tax and rate cuts will help but the consumer is still clearly struggling with real retail sales per person trending down so far this year after a mild rise into late last year,” he wrote in an economic note.

“The cost of living remains a problem – falling inflation is not the same thing as falling prices.”

In company news, Ramsay Health Care jumped 5.89 per cent to $38.30 on the back of reports in the Newcastle Herald claiming the Australian hospital operator won approval of its new building applications in NSW.

Shares in fintech Findi slumped 8.91 per cent $4.60 despite reporting a 54 per cent gain in underlying profits to $6m.