Australian shares dropped 1.1 per cent at lunchtime after Wednesday’s inflation data topped expectations at 4 per cent for the year to May. Shares were higher in New York, although Europe slipped ahead of this weekend’s French elections.
The worst-performing sector is real estate, down 2.4 per cent as traders lifted bets on the Reserve Bank lifting interest rates in August. The financials sector dominated by the big banks lost 1.5 per cent, with Commonwealth Bank retreating 1.6 per cent to $124.92.
“We now expect the RBA to remain on hold for longer,” said NAB’s economics team. “With a first rate cut now unlikely until May 2025 (previously November 2024). From there we see a steady profile of one cut per quarter back to 3.10 per cent, now reaching that point in mid-2026.”
On Wall Street, tech rallied, paced by gains in Apple, Amazon and Tesla. Nvidia reversed late to end modestly higher. Micron Technology shed near 6 per cent in after-hours trade after its sales forecast disappointed.
Also overnight, the Federal Reserve said all 31 US banks passed the bank’s annual stress test: “they are well positioned to weather a severe recession and stay above minimum capital requirements”.
Stocks in focus
Under pressure retailer Baby Bunting said it still expects pro forma net profit between $2 million and $4 million in financial 2024. It said sales had improved on the start of the year, with same store sales down 0.7 per cent for the period May 1 to June 24.
“All this isn’t helped by the rental crisis, the difficulty in getting childcare and the fact that people just aren’t having as many babies any more,” said Richard Hemming the founder of sharemarket advisory service Under the Radar report.
“Their main effort to improve margins is to bring in more private label, which seems to be going well. Trying to go from 10 per cent to 20 per cent of sales. Everyone else is doing this because private label means you capture more of the margin.” Shares jumped 23 per cent to $1.52.
Television and radio broadcaster Southern Cross Media (SCA) said it’s decided to reject a takeover offer from Australian Community Media for some of its broadcast assets.
“SCA has concluded that the relevant assets do not align with SCA’s audio strategy and would not create value for SCA shareholders,” it said in a statement.
Qatar in talks to take up to 20pc stake in Virgin. The transaction, if successful, would hand the Qatari carrier up to 20 per cent of the private equity-owned airline and comes amid a stalled ASX float process.