Australian shares settled largely unchanged on Thursday after trading in a tight range for most of the session, as strong retail sales numbers bolstered prospects of another rate hike.
The S&P/ASX 200 index fell 1.6 points to 7,194.9, with losses in gold and mining stocks countering gains in banks and tech shares. The index has gained 2.2% so far in the first half of the year, compared with a near 12% drop a year earlier.
Australian retail spending rebounded in May, indicating consumption remained resilient, and adding to the case for another rate hike by the Reserve Bank of Australia (RBA).
Australian shares snap 4-day losing streak as banks and miners gain
The strong retail sales data has complicated the situation for the central bank, which has raised rates by a record 400 basis points since May last year, as a sharp fall in inflation last month argues the case for a pause.
“Today’s data, along with the strong May labour force release, outweighs yesterday’s softer-than-expected headline CPI print,” analysts at ANZ Group said in a note.
Analysts at both ANZ and NAB remained firm on their forecast for a quarter-point rate hike in both July and August.
However, a pause would be a “great news for the ASX”, said Josh Gilbert, a market analyst at eToro, adding that investors would still have to digest the fact that there could be more hikes down the line at some point.
The RBA is set to meet on July 4, and around 36% of market participants are pricing in a quarter-point rise, up from 27% ahead of the retail sales data.
Gold stocks fell 1% as bullion prices lingered near a mid-March low amid a stronger dollar. Top gold miner Newcrest Mining declined 1.2%.
Miners ended 0.8% lower, with BHP and Rio Tinto falling 1% and 1.2%, respectively.
Meanwhile, heavyweight financials rose 0.5%, with the so-called ‘big four’ banks up between 0.1% and 1.2%.
In New Zealand, the benchmark S&P/NZX 50 index rose 0.6% to 11,808.12.
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