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Miners, financials lead losses
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U.S April CPI data in focus
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Australia's Federal budget sparks inflation concerns
(Updates to close)
By Nausheen Thusoo
May 10 (Reuters) - Australian shares fell on Tuesday,
weighed by weakness in financial and mining stocks, while
investors remained cautious ahead of a U.S. consumer price index
report scheduled to come later in the day.
The S&P/ASX 200 index closed 0.1% lower to
7,255.7-points.
Investors are eagerly waiting for the U.S. consumer price
data that could damage hopes for interest rate cuts later this
year if inflation fails to show much of a decline. "Despite continued decline in the U.S. CPI in the previous
months, markets are now expecting inflation to become stickier
at around 5%," said Glenn Yin, Head of Research and Analysis
from AETOS Capital Group.
"Such expectations naturally promote investors to
reconsider U.S. Federal Reserve’s rate path – the
higher-for-longer approach certainly weighs on risk assets."
On the other hand, Australia's Labor government on Wednesday said the billions in cost-of-living relief unveiled in the federal budget for families and businesses will not worsen inflationary pressures and put more pressure on the central bank to lift rates further. "It would be premature to conclude that the Reserve Bank of Australia is done with hiking its policy rate, given the Australian inflation is still much higher than many global peers at 7%," Glenn added.
"In addition, the Federal Budget released last night also indirectly injects cash into the economy and may lead to more persistent inflation."
Back on the local bourse, financials became the biggest laggard on the benchmark, toppling 0.5% with two out of the "big four" banks trading in the red.
Miners further dragged the index by falling 0.3%. Sector giant BHP group and Rio Tinto traded in the negative territory.
Energy Stocks chased oil prices lower to fall 0.3% while gold stocks fell 0.5%.
New Zealand's benchmark S&P/NZX 50 index rose 0.8%
to finish the session at 11,987.3-points.
(Reporting by Nausheen Thusoo in Bengaluru; Editing by Janane
Venkatraman)
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