S&P/ASX 200 Slips as Retail Sales Data Raises Inflation Worries

May 28, 2024 05:57 PM AEST | By Team Kalkine Media

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S&P/ASX 200 Slips as Retail Sales Data Raises Inflation Worries — Image source: Pixabay

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Australian shares closed lower on Tuesday, influenced by the country's retail sales data, which hinted at elevated inflation rates. This dampened investor sentiment, with attention shifting to the upcoming inflation print for further insights into monetary policy. The S&P/ASX 200 index fell 0.3% to 7766.70 points, retracting from its 0.8% rise on Monday.

Retail sales growth in April crawled at a sluggish pace, suggesting reduced consumer spending and weakening expectations for household expenditure to contribute to economic growth in the quarter. Analysts at Capital Economics remarked that this data aligns with their forecast of inflation reaching the upper end of the Reserve Bank of Australia's (RBA) 2-3% target band in the second half of the year.

Investors now anticipate local inflation data scheduled for release on Wednesday. While projections foresee the RBA initiating interest rate cuts at the beginning of next year, prolonged consumption weakness may prompt an earlier rate adjustment, according to analysts.

Financial stocks dipped 0.14% on concerns regarding interest rates. Westpac (ASX: WBC) concluded 0.4% lower, and financial conglomerate Macquarie (ASX: MQG) closed the day down 0.8%.

Miners experienced a 0.1% decline as iron-ore prices retreated overnight. Industry giants BHP Group (ASX: BHP) and Rio Tinto (ASX: RIO) finished 0.2% and 0.05% lower, respectively.

The energy sub-index also recorded a downturn, sliding 0.1% and marking its fifth consecutive session of losses, mirroring broader market trends. Key player Woodside (ASX: WDS) closed down 0.3%.

Technology stocks mirrored the subdued sentiment, with Wall Street's closure for Memorial Day contributing to the somber mood. Sector majors Xero (ASX: XRO) and WiseTech Global (ASX: WTC) registered losses of 0.4% and 0.6%, respectively.

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