The ASX 200 experienced a 1.01% decline on Wednesday due to hotter-than-expected Australian inflation numbers. The Monthly CPI Indicator rose from 3.6% to 4.0% in May, surpassing economists’ forecast of 3.8%. ABS Head of Price Statistics Michelle Marquardt highlighted that items like Automotive fuel, Fruit and vegetables, and Holiday travel influenced CPI inflation. Excluding these volatile items, the underlying inflation rate stood at 4.0% in May.
The potential for an August RBA rate hike led to concerns within the banking sector regarding non-performing loans. ANZ Group Holdings Ltd and Commonwealth Bank of Australia both experienced a decline of 1.23% and 1.10%, respectively. The anticipation of higher interest rates weighed on investor sentiment towards banking stocks.
Gold and mining stocks also faced negative repercussions from the inflation data. Northern Star Resources Ltd. saw a 3.50% decrease as gold prices continued to fall. Furthermore, BHP Group Ltd and Rio Tinto Group Ltd experienced declines of 1.32% and 1.54%, respectively, amidst trade talk uncertainties between the EU and China. The possibility of a trade war was particularly concerning for these resource companies.
In contrast to other sectors, oil-related stocks saw a positive outcome as WTI Crude prices rose on Wednesday. Woodside Energy Group Ltd was up by 0.59%, reflecting the boost in the oil market amidst the wider market downturn.
The ASX200’s performance was heavily influenced by the unexpected inflation data, with various sectors responding differently to the news. While banking and resource stocks faced declines, oil-related stocks managed to maintain some level of positivity. It is essential for investors to stay informed about economic events and market trends to make well-informed decisions in such volatile times.