The S&P/ASX200 is lower today, dropping 24.00 points or 0.34% to 7,014.20. The index has lost 2.08% for the last five days, but is virtually unchanged over the last year to date.
Only Real Estate was in the green this afternoon, up 0.10% – all other sectors were pointing down, some by as much as 1.13% (both Energy and Information Technology). Health Care and Consumer Discretionary were close behind, edging down 0.99% and 0.73% respectively.
CPI data for August
CPI across all groups rose 5.2% over the year to August, up from 4.9% the month prior, heavily impacted by the higher cost of fuel.
When volatile items – travel, fuel, and fruit and vegetables – are excluded, monthly CPI only increased 5.5%, which is down from 5.8% in the previous month.
Insurance is shaping up as a thorn in the side of businesses, adding to other big cost pressures. Construction is very reliant on insurance, so although building materials’ price growth momentum is slowing, rising insurance premiums are shaping up as an issue for industry.
Residential rents and fuel also continue to gain momentum.
Investors “climbing a wall of worry”
Earlier today, ahead of the CPI reading, eToro market analyst Josh Gilbert had this to say about the markets:
“It was another down day for the ASX200 yesterday, with the index now wiping out all gains in 2023 as the global rout in stocks continues. US stocks followed suit overnight, with the S&P500 and Nasdaq 100 falling by 1.5% and consumer confidence dropping to a four-month low.
“Investors are climbing a wall of worry right now due to plenty of uncertainty hanging over markets. A combination of steep oil prices, a burgeoning US government shutdown and the higher-for-longer narrative have nurtured a risk-off sentiment among investors.
“That said, we aren’t seeing dramatic sell-offs across markets but broad weakness, which can also be put down to poor seasonality and some profit-taking after a tremendous 1H, especially from US equities.
“As mentioned, investor focus today turns to the monthly CPI reading.
“Inflation is expected to rise, with the Bloomberg consensus at 5.2%. Fuel prices will be the driver of the rise, with a significant jump in recent months. Any ‘big’ surprises above 5.2% will put the ASX under pressure today, adding to recent losses.
“It will also raise question marks over Q3 CPI and raise market expectations of another hike in 2023. A positive outcome would be a reading under 5%, which could help to give the local market a much-needed tailwind."
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