Australia Stocks Close Near Flat After Mixed Inflation Data
July 27 2016 - 3:32AM
Dow Jones News
By Rebecca Thurlow
SYDNEY--Australia's share market ended nearly flat after
inflation data failed to provide clarity on whether the Reserve
Bank of Australia will likely cut official interest rates in
August.
The S&P/ASX 200 finished up 2.2 points, or 0.4%, at 5539.7
on Wednesday.
The index started the session higher, taking its lead from U.S.
stocks and higher iron-ore prices which boosted the mining sector.
However, the local bourse drifted lower during the morning,
accelerating its descent after the inflation data.
Australia's second-quarter inflation data was expected to show
core inflation up 0.4% in the quarter, low enough to justify an
interest rate cut in August. But it came in at 0.5%, complicating
the decision.
The resource sector bounced after lagging the market in the past
week following a strong rally in the first six months of the year.
BHP Billiton ended 3.1% higher, Rio Tinto rose 1.9%. Fortescue
surged 7% after reporting it cut production costs further in the
April-June period, bolstering margins on the iron ore it sells.
Stocks in the health-care and utilities sectors were among the
weakest, continuing to give up gains from earlier in the week when
they benefited from a switch away from resources into more
defensive investments. CSL ended 1.4% lower and Telstra slipped
0.8%.
Altair Asset Management Market Analyst Tristan K'Nell said with
the inflation data out, all eyes now turn to the finish of the
Federal Reserve's two-day meeting later Wednesday in the U.S.
"No rate hike is expected but their wording will be closely
watched," Mr. K'Nell said. "It would seem that any hike would come
after the presidential election, which is in November. So I think
even with an improving economy the Fed is likely to hold off any
moves till at least December at the earliest."
- Write to Rebecca Thurlow at rebecca.thurlow@wsj.com
(END) Dow Jones Newswires
July 27, 2016 03:17 ET (07:17 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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