ASX retreats after Reserve Bank minutes; Coal miners jump again

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

The numbers

Miners and consumer discretionary companies kept the Australian sharemarket in the red on Tuesday, with the Reserve Bank’s latest meeting minutes prompting a further retreat on the local bourse following a mixed finish on Wall Street overnight.

The S&P/ASX 200 Index fell 32.5 points, or 0.4 per cent, to 7718.2 at the close. The Australian dollar was fetching US66.42¢.

Tech stocks bolstered Wall Street. Credit: AP

Investors pulled money from the index after the Reserve Bank’s latest meeting minutes showed the central bank discussed raising interest rates at its June meeting. In the minutes, the Reserve noted demand was still exceeding supply, although it said the gap was shrinking.

The lifters

Coal miners continued their rally after a strong finish on Monday, with Whitehaven (up 5.7 per cent) and Yancoal (up 1.5 per cent). Oil and gas heavyweight Woodside (up 3.1 per cent) was also stronger, helping to lift the energy sector 2 per cent.

Medical equipment supplier EBOS (up 2.1 per cent), Telix Pharmaceuticals (up 1.4 per cent) and Treasury Wine Estates (up 1.4 per cent) were also among the biggest mega-cap advancers.

The laggards

Rate-sensitive miners (down 0.6 per cent), real estate investment trusts (REITs, down 1.4 per cent) and consumer discretionary firms (down 0.9 per cent) were among the worst performers. Wesfarmers (down 1.1 per cent) and Lottery Corporation (down 1.8 per cent) both fell along with Goodman Group (down 2.1 per cent) and Charter Hall Group (down 3.3 per cent).

Mineral Resources (down 2.3 per cent), Pilbara Minerals (down 3.6 per cent) and Seven West Holdings (down 2.3 per cent) were the biggest large-cap decliners, while heavyweight iron ore miners BHP (down 0.3 per cent), Fortescue (down 0.9 per cent) and Rio Tinto (down 0.9 per cent) dragged the index lower.

The lowdown

IG Australia market analyst Tony Sycamore said the ASX slipped for a second day in a row as concerns grew following last week’s first US presidential debate that a Trump victory would escalate US fiscal deficit concerns and inflame inflation.

“The ASX 200 has its own inflation concerns, highlighted by last week’s upside inflation surprise and the release of the RBA meeting minutes for May today, which confirmed that a rate hike was considered at the June board meeting,” he said.

The big four banks all traded in the red with the country’s biggest bank, CBA, shedding 0.4 per cent. Shares in Bendigo and Adelaide Bank slipped 1 per cent after the company announced its chief customer officer, Richard Fennell, would succeed Marnie Baker as chief executive.

Overseas, US stocks drifted to a mixed finish, and yields jumped in the bond market as elections continue to drive swings in financial markets worldwide.

The S&P 500 rose 0.3 per cent to kick off a shortened, four-day week that includes the Fourth of July holiday. The Dow Jones edged up by 0.1 per cent, and the Nasdaq composite gained 0.8 per cent.

Some of the world’s strongest action was across the Atlantic, where the CAC 40 index in Paris jumped as much as 2.8 per cent before settling to a gain of 1.1 per cent. Results from France suggested a far-right political party may not win a decisive majority in the country’s legislative elections. That bolstered hopes for potential gridlock in the French government, which would prevent a worst-case scenario where a far-right with a clear majority could push policies that would greatly increase the French government’s debt.

This is a big year for elections worldwide, with voters heading to the polls in the United Kingdom later this week and soon elsewhere. In the United States, pollsters are measuring the fallout from last week’s debate between President Joe Biden and former president Donald Trump. It all underscores “political polarisation and how elections are determining economics, rather than vice versa”, according to Nick Gentle and other members of the product management group at Barclays.

Trump Media & Technology Group, whose stock has been rising and falling with Trump’s White House chances, climbed 1 per cent to $US33.08. Shares of the company behind Trump’s Truth Social platform, though, are still well below their perch of roughly $US70 reached earlier this year.

The bond market was home to some of US markets’ strongest action. Treasury yields jumped again, as they did Friday immediately following the Biden-Trump debate. Increased prospects for a Republican sweep in November sent traders back to moves from 2016, according to strategists at Morgan Stanley. Besides pushing rates higher, traders also piled into stocks of oil-and-gas and financial companies.

Hopes for rate cuts held after a report on Monday showed US manufacturing weakened last month by more than economists expected. Perhaps even more importantly for Wall Street, the report from the Institute for Supply Management also said price increases are decelerating. Taken together, the data could offer more of the evidence that the Federal Reserve wants to see of lessening pressure on inflation before it will cut rates.

This week’s economic highlight will likely arrive on Friday, when the US government will say how many workers employers hired during June. Economists predict overall hiring slowed to 190,000 from May’s 272,000. That would get the number closer to what Bank of America calls the “Goldilocks” figure of roughly 150,000, give or take 25,000.

Tweet of the day

Quote of the day

“Naming a bank is a sanction that we reserve for the most serious and systemic breaches,” said the Banking Code Compliance Committee chair, Ian Govey, as the watchdog sanctioned ANZ for breaching its code obligations including continuing to charge or failing to refund fees for deceased estates.

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With AP

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