Weak inflation sends $A to three month low

Christian Edwards
(Australian Associated Press)

 

The share market has inched back above 5,900 points as mining and energy stocks gained ground, and weaker than expected inflation sent the Australian dollar to a three month low.

The benchmark S&P/ASX200 index rose 0.14 per cent to 5,905.6 points, just the second time it has closed above 5,900 points since early May.

The energy and materials sectors were the market’s best performers, while consumer staples was the weakest sector, as Coles owner Wesfarmers fell sharply after its quarterly sales report.

Weaker than expected inflation in the September quarter weighed on the local currency, as economists said the Reserve Bank of Australia would likely leave the cash rate unchanged for some time.

The Australian dollar dropped more than half a US cent to a low of 77.16 US cents, and managed only a slight improvement by the end of local trade.

CMC chief market strategist Michael McCarthy said share market investors were hesitant to react to the economic data, with the ASX trading at four month highs.

“The CPI had a dramatic hit on the dollar but almost no discernable impact on the market which has been lifting, up five to six per cent in three weeks,” he said.

Wesfarmers shares dropped $1.24, or 2.9 per cent, to $41.49 as sales growth at Coles slowed in the first quarter of the financial year, and sales dropped sharply in its UK Bunnings business.

Shares in competitor Woolworths also fell in morning trade but recovered some ground to end 0.4 per cent weaker at $25.15.

A rise in iron ore prices buoyed the miners, with BHP Billiton up one per cent at $26.82, Rio Tinto 0.4 per cent higher at $69.64 and Fortescue Metals one per cent stronger at $5.05.

A similar move in oil prices drove the energy sector, with Origin Energy adding 1.9 per cent to $7.60, Santos adding 1.6 per cent to $4.35 and Oil Search gaining 1.4 per cent to $7.23.

National Australia Bank was the best of the big four on a quiet day for the lenders, gaining 0.3 per cent to $32.65.

Telstra dropped 1.1 per cent to $3.52.

ON THE ASX:

* The benchmark S&P/ASX200 index added eight points, or 0.14 per cent, to 5,905.6 points.

* The broader All Ordinaries index added 10.2 points, or 0.17 per cent, to 5,972.6 points.

* The SPI200 futures contract was up six points, or 0.1 per cent, at 5,889 points.

* National turnover was 3.95 billion securities traded worth million $5.75 billion.

CURRENCY SNAPSHOT AT 1700 AEDT:

One Australian dollar buys:

* 77.24 US cents, from 78.11 US cents on Tuesday

* 87.88 Japanese yen, from 88.67 yen

* 65.64 euro cents, from 66.44 euro cents

* 58.79 British pence, from 59.12 pence

* 111.94 NZ cents, from 112.70 NZ cents

GOLD:

The spot price of gold in Sydney at 1700 AEDT was $US1,274.13 per fine ounce, from $US1,280.95 per fine ounce on Tuesday.

BOND SNAPSHOT AT 1630 AEDT:

* CGS 4.50 per cent April 2020, 1.9526pct, from 2.0004pct on Tuesday

* CGS 4.75pct April 2027, 2.7132pct, from 2.7264pct

Sydney Futures Exchange prices:

* December 2017 10-year bond futures contract at 97.215 (implying a yield of 2.785pct), from 97.2 (2.8pct) on Tuesday

* December 2017 3-year bond futures contract at 97.92 (2.08pct), from 97.87 (2.13pct).

(*Bond market closes taken at 1630 AEDT previous local session; currency closes taken from 1700 AEDT previous local session)

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