ASX 200 Pulls Back Amid Hot July Inflation Report
The Australian stock market pulled back in yesterday's trading session, led by a hotter-than-expected July inflation report. The ASX 200 fell 0.98% to close at 9,038.20, with the All Ordinaries declining 1.02% to 9,243.20.
The broad sell-off was not uniform, with some sectors being hit harder than others. Financials fell 0.68%, Materials lost 1.19%, and Energy slipped 0.19%, while Industrials finished almost unchanged, up 0.02%.
Ramsay Health Care led the advance, rising 13.72% to $50.06 after a strong earnings result and profit beat drew market attention. Tasmea Ltd added 6.63% to $9.81, Virgin Australia Holdings Ltd rose 6.04% to $2.81, Tabcorp Holdings Ltd gained 5.5% to $0.96, EQ Resources Ltd climbed 5.13% to $0.41, and Qantas Airways added 4.77% to $9.66.
The losing list was more revealing of the macro pressure, with Magellan Financial Group Ltd falling 14.03% to $9.50 after its own financial results, Sigma Healthcare dropping 7.75% to $2.62, Minerals 260 Ltd declining 5.29% to $0.895, Eagers Automotive Ltd losing 5.08% to $22.23, Liontown Ltd slipping 4.58% to $1.145, and Wesfarmers Ltd falling 4.58% to $79.46.
The main catalyst hitting sentiment on the day was July CPI, which rose 3.5% year-on-year, above consensus expectations around 3.3% and only slightly down from the prior 3.8% reading. The core measure also rose 3.6% year-on-year, above estimates for 3.5%, while the monthly core increase of 0.5% was the strongest in about a year.
The bond market response was swift, with Australian 2-year and 10-year yields moving to their highest levels since May, while the 30-year yield reached multi-year highs. Analysts are now roughly split on whether the Reserve Bank of Australia delivers a 25-basis-point hike at its next meeting, while markets have fully priced a hike by November.