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Australian shares tumbled to a three-week low on Wednesday, driven down by significant losses in heavyweight financial stocks. Investors were keenly awaiting the April consumer inflation numbers to glean more insight into the future direction of monetary policy.
Market Performance
The S&P/ASX 200 index fell by 1.30%, landing at 7,665.60 points. This decline followed a 0.3% drop on Tuesday.
Recent data revealed that Australian retail sales grew in April, but at a very slow pace, reflecting reduced consumer spending amid high borrowing costs and escalating rents. This tepid growth added to concerns about the overall economic outlook.
Inflation Expectations
The April inflation data, due at 0130 GMT, is highly anticipated by investors. Analysts in a Reuters poll expect only a slight decrease in annual inflation, predicting it will dip to 3.4% from March's 3.5%. This marginal change underscores the persistent inflationary pressures in the economy.
Sectoral Impact
Rate-sensitive financial stocks bore the brunt of the downturn, with the financial index dropping by 1%. The "Big Four" banks—Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ), and National Australia Bank (ASX: NAB)—each declined between 1.1% and 2.45%.
Mining stocks experienced a modest decline of 0.1%. Major iron ore player Fortescue Metals Group (ASX: FMG) plunged by as much as 3.55%, while Rio Tinto (ASX: RIO) retreated by 1.49%. However, BHP Group (ASX: BHP), the world's largest listed miner, remained largely flat ahead of a crucial deadline to either submit a firm offer for smaller British rival Anglo American or step back for six months.
Technology and healthcare stocks also traded in negative territory, with the tech sector down 0.5% and healthcare falling 0.7%.
Gold and Energy Sectors
Contrary to the broader market trend, gold stocks advanced by 0.4%, supported by rising bullion prices which benefited from a weaker dollar ahead of upcoming U.S. inflation data.
New Zealand Market
In contrast to the Australian market, New Zealand's benchmark S&P/NZX 50 index rose by 0.4% to 11,731.45, recovering from three consecutive sessions of losses.
Outlook
The mixed performance across sectors highlights the varied impacts of economic data and global market expectations. While financial and mining sectors struggled, gains in gold and energy stocks provided some relief. Investors continue to focus on inflation readings and monetary policy signals to navigate the current market volatility.
