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Highlights
- ASX 200 index suffers a 0.4% decline with broad-based sector losses.
- Retail sales data raises concerns about interest rate cuts.
- Star Entertainment (SGR) and Lovisa (LOV) face heavy losses.
The Australian stock market experienced another retreat on Thursday, with the S&P/ASX 200 dropping by 0.4%, or 35.9 points, to settle at 8313.2. The market was weighed down by a series of sector losses, led by energy stocks and dampened by fresh concerns around the economic outlook.
A surprising rise in retail sales for November, up 0.8% instead of the anticipated 1% growth, threw cold water on expectations that interest rates would soon be reduced. The data showed consistent spending throughout the month, a departure from the concentrated burst usually seen around Black Friday sales. Analysts caution that sustained consumer spending could place pressure on the Reserve Bank of Australia (RBA), delaying any potential interest rate cuts into 2025.
In response to these economic concerns, the Australian dollar weakened, dipping to trade at US62¢. Across the sectors, every part of the index saw losses, with energy stocks suffering the hardest blows. Woodside Energy (ASX:WDS) dropped by 1.2%, and Santos (ASX:STO) followed suit with a 1.2% slide. This pullback came on the heels of plummeting oil prices. The losses were broad-based, affecting major mining and banking stocks as well, including BHP Group (ASX:BHP) which dipped by 1.2% at the open.
Traders also sold off stocks in the banking sector, with Commonwealth Bank (ASX:CBA) and ANZ (ASX:ANZ) experiencing slight drops of 0.5%. On a brighter note, some miners like Fortescue Metals (ASX:FMG) and Rio Tinto (ASX:RIO) posted modest gains, although these were not enough to reverse the negative trend across the board.
Among notable stock movements, Star Entertainment (ASX:SGR) saw a drastic 23.1% fall after the company revealed it has just $79 million in cash left. This raised concerns about its ability to manage its finances, especially after facing challenges surrounding its loan agreements. Similarly, Lovisa (ASX:LOV) plummeted by 10.2% after UBS downgraded its rating due to disappointing store growth.
Shares of Avita Medical (ASX:AVH) also faced a heavy sell-off as the company announced it would miss its revenue forecasts, resulting in over a 25% decline since Wednesday. However, Macmahon Holdings (ASX:MAH) was able to mitigate losses, as the company secured a large $463 million contract from Indika Energy.
With so many companies facing challenges, the Australian stock market remains under pressure, with continued uncertainty in the outlook for interest rates and economic growth.
