The laggards

Consumer staples stocks were among the biggest losers, slumping 3.6 per cent, led lower by Woolworths (down 6.1 per cent) after the nation’s biggest supermarket chain warned its first-half profits will take a hit as customers opt for cheaper products amid households’ cash-strapped budgets.

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Earnings before interest and tax from its Australian food business would come in at a range of $1.48 billion to $1.53 billion in the December half, compared to $1.6 billion in the previous year, Woolies said before the market opened. Its rival Coles lost 2.4 per cent on the news and Treasury Wine Estates slipped 1.6 per cent.

Consumer discretionary stocks also declined, with Bunnings, Kmart and Officeworks parent Wesfarmers down 2.5 per cent and furniture retailer Harvey Norman losing 2.2 per cent.

Meanwhile, embattled casino operator Star Entertainment fell 3.8 per cent after reporting an 18 per cent slump in revenues in the September quarter. It blamed the continued “deterioration in operating performance from a challenging operating environment and the continued implementation of mandatory carded play and cash limits”.

Financial stocks also declined. The big four banks were all trading lower, with CBA – the nation’s largest lender and the biggest stock on the ASX – down 0.9 per cent. National Australia Bank slipped 1.2 per cent and ANZ shed 1.1 per cent, while Westpac edged down 0.7 per cent.

The lowdown

The Australian Bureau of Statistics reported that overall prices grew by just 0.2 per cent in the September quarter, bringing annual inflation down to 2.8 per cent. The fight against inflation is guiding the Reserve Bank’s interest rate decision when it meets next week.

“The September quarter’s rise of 0.2 per cent is the lowest outcome since the June 2020 quarter fall which occurred during the COVID-19 outbreak and was driven by free childcare,” said the bureau’s head of prices statistics, Michelle Marquardt.

“Annually, the September quarter’s rise of 2.8 per cent was down from 3.8 per cent in the June quarter. This is the lowest annual inflation rate since the March 2021 quarter.”

AMP chief economist Shane Oliver said the while the results were positive, they were unlikely to prompt an end-of-year rate cut from the RBA as the underlying inflation number, which removes any volatile price changes, remained above the central bank’s 2-3 per cent target band at 3.5 per cent.

“I think that seems to have been the reason why the market has reacted the way it has. It was probably looking for a bit more of a reduction in the underlying rate of inflation, [and] we didn’t get that,” he said.

“That said, it’s possible we might still get a rate cut by year-end if the monthly inflation rate is still falling … and if the rate of the [monthly underlying inflation numbers] continues to fall into October, then it’s possible we’ll get a cut by year-end, but it appears to be more likely that it’s going to be February.”

Oliver expects the Australian sharemarket to continue to operate nervously as it awaits the result of the US election next week, along with anticipation for an announcement out of China that will unveil key fiscal stimulus to boost the economy.

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Overnight on Wall Street, the S&P 500 rose 0.2 per cent to inch closer to its all-time high set this month, even though most of the stocks in the index fell for the day.

Gains for influential Big Tech stocks helped mask weakness elsewhere, and they pushed the Nasdaq composite up 0.8 per cent to top its last all-time high set in July. The Dow Jones, meanwhile, fell 154 points, or 0.4 per cent.

Google parent Alphabet topped third-quarter revenue expectations on Tuesday, helped by an AI-driven 35 per cent surge in its cloud business as well as a jump in its digital advertising revenue.

Alphabet shares, which closed up 1.8 per cent, were up 4.4 per cent in after-hours trading. The stock has risen nearly 22 per cent this year, in line with the broader market.

Other market heavyweights such as Microsoft and Meta Platforms were among the strongest forces pushing the S&P 500 upward.

They helped offset an 8.4 per cent drop for Ford Motor, which said an underlying measure of profit for the full year would probably come in at the bottom end of its forecasted range.

Trump Media & Technology Group, the company that tends to move more with Trump’s re-election odds than on its own profit prospects, climbed another 8.8 per cent on Tuesday. It moved so sharply during the day that trading of its stock was briefly halted several times.

Tweet of the day

Quote of the day

“I am very excited about this. SMS has been the standard for 20 years, with lots of good things but also some quite negative downsides, especially around fraud.”

That’s Robert Gerstmann, co-founder of Swedish communications tech company Sinch, speaking about his visit to Australia to talk to local telcos about implementing RCS, a technology dubbed “SMS on steroids”.

Read David Swan’s exclusive about how Rich Communication Services could slash the rate of spam messages and bring Australia up to speed with markets such as the US and Singapore.

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With AP

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