Consumer, real estate slump under shadow of RBA rate hike fears

Real estate investors have taken a backwards step on the sector Tuesday, as the Reserve Bank minutes show the cash rate could be hiked again.

Energy is the only sector to record gains on the S&P/ASX200 on Tuesday. Picture: NewsWire / Nikki Short

Fears of a rate hike have knocked the froth off real estate and discretionary spending share prices.

RBA minutes released today show the board holds persistent fears about rising prices and the challenge to bring inflation back to its target band of 2-3 per cent.

Citi Australia chief economist Josh Williamson, in the wake of the minutes being released, said “not raising rates risks policy credibility and would signal a dilution in importance of inflation, which would be unheralded”.

Real estate was the worst-performing sector on the ASX on Tuesday. Picture: NewsWire / Max Mason-Hubers

The minutes were released shortly before lunch, and by the time markets closed the S&P/ASX 200 finished down 32.5 points, or 0.42 per cent, to 7,718.2.

Energy was Tuesday’s hot ticket, the sector closing as the only positive performer, up 2.15 per cent on the back of a rally in crude prices: an (apparent) rush to fill up gas-guzzlers and ATVs before the Fourth of July kicked that into gear.

Down the line in Australia, Whitehaven Coal carried on its rally into Tuesday, going up 5.8 per cent to a 17-month high; the price had jumped 6.5 per cent on Monday.

Consumer-facing discretionary stocks took a hit Tuesday, few as big as jewellery giant Lovisa.

Underperforming Woodside fell well beyond the ASX200 benchmark earlier this year, but the miner’s price fought back Tuesday, gaining 3.1 per cent to $29.13.

But energy was the only sector to finish green on the ASX200.

“Unsurprisingly, the interest rate-sensitive ASX200 real estate sector has been today’s worst-performing sector,” IG market analyst Tony Sycamore said.

The sector shed 1.21 per cent by close, down 43.4 points to 3,551.1.

Property developer and fund manager Charter Hall Group fell 3.2 per cent, to close at $10.90.

The steepest decline was an 8.69 per cent loss for Perth-based CAQ Holdings, which has Chinese shopping interests. CAQ fell to $0.02.

“The prospect of an additional RBA rate hike has weighed on consumer-facing stocks, which continue to give back the gains that followed the federal budget in mid-May,” Mr Sycamore said.

Unfortunately for CAQ shareholders, the company has jewellery interests as well, and the discretionary equities finished Tuesday at the bottom of the pile with real estate.

Jewellery giant Lovisa lost 3.69 per cent to finish at $30.73. Dominos closed at $34.80, a 2.77 per cent slice.

The All Ordinaries fell 32 points, or 0.41 per cent, to 7,959.70.

Originally published as Consumer, real estate slump under shadow of RBA rate hike fears