ASX flat ahead of inflation data, Fed hike

·4-min read

The Australian share market has had another quiet day ahead of two big midweek risk events - domestic inflation data and a pending hike in interest rates for the world's biggest economy.

The benchmark S&P/ASX200 index on Monday closed down 1.6 points, or 0.02 per cent, while the broader All Ordinaries dropped 5.4 points, 0.08 per cent, to 7,006.4.

"A bit of a quiet old day, unfortunately," City Index analyst Tony Sycamore told AAP. "But probably to be expected - it's such a huge week this week.

"Usually at the end of the calendar month, it goes a little bit quiet. Obviously that's not going to be the case this month."

It's hard to know what will be more influential for the Australian market, Mr Sycamore said.

There's the Federal Reserve meeting early on Thursday (Australia time).

While "you can pretty much guarantee" the US central bank will raise the funds rate by 75 basis points, market participants will be scouring the Fed's accompanying statement for signs of hawkish commentary, Mr Sycamore said.

Also, on Wednesday morning the Australian Bureau of Statistics will release second-quarter consumer price data, with the consensus estimates predicting inflation will come in at 6.2 or 6.3 per cent.

A higher number would increase pressure on the Reserve Bank to raise rates more aggressively at its next board meeting on August 2, and higher interest rates make riskier equities look less attractive to investors.

Local economists are forecasting a rate hike of 50 basis points, but Mr Sycamore said the market was predicting a 65 basis point hike, which would bring the cash rate to an even 2.0 per cent.

"That would get it back to those nice round numbers which everybody likes," Mr Sycamore said. "To me, it makes sense to go for 65 basis points."

Utilities and mining were the best-performing sectors on Monday, both rising 1.1 per cent, the latter on the back of a rally in iron ore prices.

BHP climbed 1.6 per cent to $37.35, Fortescue added 2.4 per cent to $18.25 and Rio Tinto gained 0.9 per cent to $97.14.

Oz Minerals dropped 3.7 per cent to $17 after the copper and gold miner trimmed its guidance, reflecting a softer start to the year due to weather, COVID-related absenteeism and damage to a material handling belt at its Carrapateena mine in SA.

The big banks were mixed, with CBA down 0.8 per cent to $97.07 and Westpac dipping 0.1 per cent to $21.05. But NAB was basically flat at $29.87 while ANZ added 0.1 per cent to $22.62.

Insurance companies had a good day, with Suncorp adding 2.6 per cent and IAG gaining 5.9 per cent.

The tech sector was the worst-performing, down 1.5 per cent after Snapchat owner Snap Inc's New York Stock Exchange-listed shares plunged on Friday following disappointing second-quarter earnings.

Computershare fell 2.3 per cent, Xero dropped 1.1 per cent and EML Payments slid 23.2 per cent to a five-year closing low of 93c.

The Brisbane-based payments processor said its Irish subsidiary had more to do to satisfy that country's central bank that it was complying with anti-money-laundering rules.

Flight Centre Travel Group gained 3.0 per cent to $17.62 after the global travel company said it had returned to profitability sooner than expected and made a "healthy" fourth-quarter profit.

Dicker Data dropped 10.5 per cent to $11.67 after the IT technology distributor announced that supply chain disruptions and increased freight costs were shrinking its profit margins.

The Australian dollar meanwhile was buying 69.18 US cents, from 69.22 US cents at Friday's close.


* The benchmark S&P/ASX200 index on Monday closed down 1.6 points, or 0.02 per cent, at 6,789.9.

* The All Ordinaries dropped 5.4 points, or 0.08 per cent, to 7,006.4.


One Australian dollar buys:

* 69.18 US cents, from 69.22 US cents at Friday's close

* 94.35 Japanese yen, from 95.30 yen

* 67.86 Euro cents, from 67.81 cents

* 57.74 British pence, from 57.78 pence

* 110.86 NZ cents, from 111.04 cents.

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