Australian shares lower despite inflation drop

The Australian dollar was buying 65.66 US cents, up from 65.56 US cents at Tuesday’s ASX close. Photo / 123RF

The Australian sharemarket has fallen despite inflation dropping to its lowest level in more than three-and-a-half years.

At midday local time the benchmark S&P/ASX200 index was down 30 points, or 0.36%, to 8219.2, while the broader All Ordinaries had fallen 24.3 points, or 0.29%, to 8481.6.

Investors were unimpressed by the one percentage point drop in the annual consumer price index to 2.8% in the September quarter.

That puts headline inflation back within the Reserve Bank of Australia’s target range of 2% to 3%.

But the drop was already widely expected by analysts and the all-important trimmed mean, which the central bank uses to gauge underlying inflation, was still at 3.5%.

Energy rebates and lower petrol prices weighed on the headline figure but price pressures remained in recreation, food, and insurance.

ANZ economists Brian Martin and Daniel Hynes accurately predicted the trimmed mean to come in at 3.5%.

“We do not think the forecast decline in trimmed mean inflation will be enough to convince the RBA it should begin the easing cycle this year, and we continue to expect it to stay on hold at 4.35% until a 25bps (basis point) cut in February 2025,” they said in a research report on Wednesday morning.

Overnight, shares rose on Wall Street led by Google parent Alphabet, which climbed higher after beating earnings estimates for the September quarter.

Miners, property trusts, and IT shares had risen at midday, while the remaining eight ASX sectors were in the red.

Australia’s largest miner, BHP, gained 1.5% after the price of iron ore climbed.

The company had moved on from its pursuit of London-listed miner Anglo-American after its takeover bid earlier this year was rebuffed, chairman Ken McKenzie told shareholders.

Fellow iron ore miner Rio Tinto rose 0.8% while Fortescue was 1.2% higher.

The big four banks were all lower, with CBA down 1%, NAB 0.9%, ANZ 0.8% and Westpac 0.5%.

Supermarket giant Woolworths tumbled 5.8% after warning profit for financial year 2025 was likely to come in lower than previously expected.

Rival Coles fell 3%, as investors recalibrated expectations for retail trading.

Troubled casino operator Star Entertainment plunged 11.3% after reporting a loss of A$1.6 billion ($1.7b) for the last financial year.

“The Star’s 2024 financial year performance was impacted by challenging trading conditions, cost-of-living pressures, casino operating reforms and loss of market share,” the company said in a statement.

Star was fined A$15 million earlier in October and had its Sydney licence suspension extended after a probe by the New South Wales Independent Casino Commission revealed further significant failings in its operations.

The Australian dollar was buying 65.66 United States cents, up from 65.56 US cents at Tuesday’s ASX close.

- AAP