A tech slide dragged the ASX indices lower on Wednesday, ahead of the US inflation data coming in overnight.
Consensus expectations were for the US headline consumer price index (CPI) to show core inflation at 3.6% for the year to August, up from 3.2% a month ago – a significant rise. Such a jump would imply a stronger likelihood of another interest rate hike by the Fed next month, unnerving the markets.
Nine of the ASX’s 11 sectors finished weaker on Wednesday, led by tech stocks, which retreated 1.6% on the sector index. Sector heavyweights WiseTech Global Ltd (ASX: WTC), Xero Limited (ASX: XRO) and Nextdc Ltd (ASX: NXT) led the fall, with WiseTech down 68 cents, or 1%, to $67.32; Xero shedding $2.33, or 1.9%, to $119.44; and NEXTDC down 28 cents, or 2.2%, to $12.72.
The tech woes helped erode the S&P/ASX 200 (INDEXASX: XJO) by 53 points, or 0.7%, to 7,153.9, while the broader All Ordinaries (INDEXASX: XAO) index dropped 57.2 points, or 0.8%, to 7,345.7.
The utilities and energy indices were slightly higher, the latter as the global benchmark Brent crude oil prices rose above $US92 a barrel for the first time since last November.
Woodside Energy Group Ltd (ASX: WDS) put on 16 cents, or 0.4%, to $37.85; while Santos Ltd (ASX: STO) added 2 cents, or 0.3%, to $7.74. Fuel refiner and retailer Viva Energy Group Ltd (ASX: VEA) fell 7 cents, or 2.4%, to $2.86 as it confirmed that major Dutch shareholder Vitol was selling a 16% stake in the company, taking its remaining interest to about 30%.
In big mining, BHP Group Ltd (ASX: BHP) was down 39 cents, or 0.9%, to $43.80; Fortescue Metals Group Ltd (ASX: FMG) weakened 36 cents, or 1.8%, to $19.60; and Rio Tinto Ltd (ASX: RIO) walked back 72 cents, or 0.6%, to $113.39.
In lithium, takeover target Liontown Resources Ltd (ASX: LTR) – in which Gina Rinehart’s Hancock Prospecting has revealed a strategic 7.7% stake, which could block the $6.6 billion bid from US lithium giant Albemarle Corporation (NYSE: ALB) – advanced 3 cents to $3.03; but producer Allkem Ltd (ASX: AKE) lost 44 cents, or 3.3%, to $12.74, and fellow producer Pilbara Minerals Ltd (ASX: PLS) sank 20 cents, or 4.4%, to $4.40. Lithium and nickel miner IGO Ltd (ASX: IGO), which went ex-dividend on the day, was hammered $1.08, or 7.6%, lower to $13.17.
Among the big banks, National Australia Bank Ltd. (ASX: NAB) eased 13 cents, or 0.4%, to $28.98; Westpac Banking Corp (ASX: WBC) gave up 7 cents, or 0.3%, to $21.49; and Commonwealth Bank of Australia (ASX: CBA) lost 41 cents, or 0.4%; but ANZ Group Holdings Ltd (ASX: ANZ) managed to add 6 cents, or 0.2%, to $25.33.
Pact to be packed-off private
Elsewhere, beleaguered packing manufacturer Pact Group Holdings Ltd (ASX: PGH) rebounded 5 cents, or 7.4%, to 72.5 cents, after billionaire businessman Raphael Geminder revealed plans to take the company private. Geminder’s Kin Group, which owns a 50% stake in Pact, has made a 68 cents per share off-market takeover offer for the remaining shares.
Household cleaning products company Pental Ltd (ASX: PTL) surged 9.5 cents, or 30.2%, to 41 cents, after announcing that it is selling its consumer products business to paints group Dulux. The deal, which excludes Pental’s Duracell and Bondi Soap brands, is valued at $60 million.
Drug developer Starpharma Holdings Ltd (ASX: SPL) jumped 3 cents, or 23.1%, to 16 cents, after positive interim results for its cancer drug, DEP irinotecan.
US inflation jump points to rate hike
In the US, the Labor Department reported that consumer price inflation (CPI) rose by 0.6% during August, for a 3.7% annual increase, up from 3.2% in July.
The monthly increase in inflation – the biggest increase in a year – was mainly driven by increases in rent and fuel costs. The core rate, which strips out food and energy, rose by 0.3%, slightly higher than economists had forecast, with the annual rate falling to 4.3% from 4.7% in July. The data implies that the Fed’s leaning toward rate rises is not over, with another hike coming into play at the September meeting in a week.
On the back of the inflation report, the blue-chip Dow Jones Industrial Average (INDEXDJX: .DJI) shed 70.46 points, or 0.2%, to 34,575.53, while the broader S&P 500 (INDEXSP: .INX) eked out a 5.54-point gain to 4,476.44 and the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) index advanced 39.97 points, or 0.3%, to 13,813.59.
On the bond market the US 10-year Treasury yield retreated 2.7 basis points to 4.259%, while the 2-year yield was down 5.1 basis points to 4.99%.
On the commodity front, gold eased US$3.99, or 0.2%, to US$1,909.09 an ounce; the global benchmark Brent crude oil grade lost 18 cents, or 0.2%, to US$91.88 a barrel, and US West Texas Intermediate crude gained 22 cents, or 0.3%, to US$88.74 a barrel.
The Australian dollar is buying 64.21 US cents this morning, up from 64.1 cents at the ASX close on Wednesday.
