ASX 200 falls ahead of key Australian and US inflation data

Local stocks started the week in the red, as investors await key economic data in coming days.

Stocks have started 2024 cautiously. Picture: Gaye Gerard

The local sharemarket fell on Monday amid shifting expectations for US interest rate cuts, ahead of the release of key inflation data for Australia and the US.

The benchmark S&P/ASX 200 Index finished in the red for the fourth trading day in a row, closing 0.5 per cent weaker at 7451.50 points as all sectors ended lower in quiet trading.

The broader All Ordinaries Index also declined 0.5 per cent, to 7676.80 points.

Capital.com senior financial market analyst Kyle Rodda said Asian markets kicked off the week on the back foot amid changing expectations for interest rate cuts in the US.

“The primary theme in the markets is the shifting expectations regarding the pace and timing of interest rate cuts this year,” Mr Rodda said.

“After Friday’s mixed batch of data and ahead of inflation figures at the end of the week, the theme will likely be the marginal driver of most markets.”

Market heavyweight BHP gave up its early gains to lead the bourse lower with a 0.8 per cent fall to $48.66.

Fellow mining major Rio Tinto dropped 0.6 per cent to $131.52 while Fortescue lost 1.6 per cent to $27.75.

The major banks finished mixed with CBA down 0.9 per cent to $111.98 and NAB losing 0.2 per cent to $30.51. But ANZ rose 0.2 per cent to $25.66 and Westpac ended flat, up just 0.09 per cent at $22.88.

US fund manager GQG Partners lifted 1.2 per cent to $1.68 after reporting record funds under management of $US120.6bn at the end of 2023.

In contrast, Magellan tumbled 7.4 per cent to $8.94 after Citi analysts warned “the market is getting ahead of itself” with the fund manager’s recent share price rally.

Energy major Woodside ended 0.4 per cent lower at $32.23 and Santos was down 0.7 per cent at $7.59.

Lithium play Kali Metals, whose rich-list backers including Mineral Resources boss Chris Ellison, made a strong ASX debut. The stock opened at 38c compared to its 25c listing price, and closed at 43.5c.

Core Lithium, which is mothballing its Finniss lithium mine in the Northern Territory due to weak commodity prices, tumbled 17.4 per cent to 19c.

Core Lithium was the biggest decliner among ASX 200 stocks, while mid-cap uranium miner Boss Energy was the biggest gainer with an 8.5 per cent jump to $4.59 after completing an “upsized and oversubscribed” share purchase plan last week.

Metcash rose 1.4 per cent to $3.55 after the supermarket, liquor and hardware group tapped former Premier Investments chief executive Richard Murray to head its Total Tools business.

Wall Street edged slightly higher on Friday with the benchmark S&P 500 up 0.2 per cent, but all three major US stock indexes snapped a nine-week winning streak. The S&P 500 ended the week down 1.5 per cent, the Dow Jones Industrial Average slipped 0.6 per cent and the tech-heavy Nasdaq Composite declined 3.2 per cent.

Commonwealth Bank economist Stephen Wu said US trading was choppy as robust December jobs data initially doused expectations of a rapid easing in interest rates.

“However, a survey from ISM then showed activity in the services sector dipped in December,” Mr Wu said. “That encouraged investors betting on a rapid easing of rates, sending equity markets higher.”

Wednesday’s monthly consumer price index data will headline the flurry of Australian economic data for November out this week, including retail sales and building approvals on Tuesday.

The market consensus is for the annual headline rate of inflation to fall from 4.9 per cent in October to 4.5 per cent in November with lower petrol prices to be a key driver.

“Inflation is clearly the indicator du jour,” CommSec chief economist Craig James said.

“So investors will be keyed into the releases of the Australian monthly consumer inflation indicator on Wednesday and data on consumer and producer prices in the US on Thursday and Friday.”

The US December inflation data, due at 12.30am Friday AEDT, is the key event for global markets this week. Chinese inflation data will also be released on Friday.