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FIVE at FIVE AU: Australian markets down as CPI provides insight into RBA's next move

Published 28/08/2024, 04:04 pm
© Reuters.  FIVE at FIVE AU: Australian markets down as CPI provides insight into RBA's next move
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Australian shares edged lower today, dropping 11.90 points or 0.15% to 8,059.30.

The biggest stragglers were Tabcorp Holdings and Johns Lyng Group, down 17.26% and 7.64% respectively.

Over the last five days, the index has gained 0.61% and is currently 1.10% off its 52-week high.

The slow day was carried by most sectors, with the exception of Consumer Staples (up 1.18%) and Utilities (up 0.13%).

Communication Services were down as much as 1.72% in the afternoon, while Energy slumped 1.40%.

CPI data

CPI data was the big news of the day. Monthly CPI rose by 3.5% year on year in July, easing from 3.8% in June and above consensus expectations of 3.4%, while the ex-volatile measure eased to 3.7% in July from 4.0% in June.

Annual trimmed mean inflation eased to 3.8% year on year from 4.1% in June.

ABS acting head of prices statistics Leigh Merington said: “CPI inflation is often impacted by items with volatile price changes like in automotive fuel, fruit and vegetables, and holiday travel.

“It can be helpful to exclude these items from the headline CPI to see underlying inflation, which was 3.7% in July, down from 4% in June."

“Today’s release, being for the first month of the new quarter, only includes updates for about 60% of the basket,” said IG senior analyst Tony Sycamore.

“Additionally, it is skewed towards goods rather than the troublesome service components such as dining out, medical services and transportation.

“The modest decline in inflation was primarily due to a fall in energy prices following the start of state and federal government energy rebates.

“Today's step down in inflation was largely expected and is unlikely to be sufficient in isolation to cause the RBA to abandon its hawkish bias at its board meeting next month.

“Nevertheless, the interest rate market still expects the RBA’s next move to be a rate cut, with a full 25bp rate cut by year-end and a cumulative 72bp of cuts by May 2025.”

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