CBA results drag down finance sector as ASX trades lower on international inflation nerves
Australian shares are trading lower on Wednesday, as investors await crucial inflation data out of the US and grapple with price hikes in China.
At 2pm AEST, the ASX 200 was down 0.2 per cent.
Inflation has emerged as one of the biggest problems being encountered by economies globally, as nations re-open from the pandemic shutdowns, deal with supply chain woes and grapple with the hangover from emergency level low interest rates.
The US inflation data is due out later on Wednesday, AEST. That country has already been showing soaring inflation.
That's also a problem here in Australia where, annually, the official rate is now at 6.1 per cent.
Rate hikes are being implemented as a result, which hits borrowers and discretionary spending.
Wall Street's two majors dipped overnight, and the Nasdaq lost 1.2 per cent as tech stocks were hit by rate-hike fears.
"Risk appetite remains cautious ahead of tonight’s US CPI data," ANZ economists said in a statement.
The inflation data out of the world's biggest economy could signal either price hikes are slowing or that they are continuing unabated.
High inflation could trigger further rate hikes, although the US Federal Reserve has already been hinting that it will not go too hard.
China's latest inflation data came out this morning, with its official numbers showing prices rose by 2.7 per cent. That's the most since July 2020.
ANZ forecasts the inflation in China will rise to between 3 and 4 per cent soon, which is above the official target.
"This is largely due to an overlap between the pork and oil price cycles," it said.
Pork has been increasing in price as the nation still rebuilds its stocks from the swine fever breakout, plus demand rises from restaurants again after post-COVID re-openings.
Oil prices are also up, both for edible oils and fossil fuels, also due to many recent supply chain issues.
China's Hang Seng had dropped around 2 per cent by mid-afternoon trade.
The Australian share market was following global sentiment down in late afternoon trade.
Of the 11 major sectors, 10 were down.
Commonwealth Bank was 0.4 per cent lower, despite it putting out results that showed it was increasing its profit on the back of the impacts of the home-loan boom. The results also showed margins were coming down, especially with rate hikes hitting home-loan margins.
All the other major banks were higher, with gains of up to 3.5 per cent by ANZ.
Other stocks trading lower included milk company A2, which had lost more than 11 per cent.
That was after it told the market that it had been knocked back by regulators in the United States to sell its baby formula there.
Meanwhile, GrainCorp gained 5.9 per cent after it released its results.
GrainCorp raised its underlying net profit after tax forecast to between $365 and $400 million, from between $310 to $370 million.
It said it was benefiting off strong crops yields, which were fetching high global prices as a crunch on supply continues due to the war in Ukraine.
GrainCorp also said it was benefiting off strong vegetable oil prices, which have been soaring due to a range of global supply issues.
Meanwhile, the ANZ said in a statement that the Australian dollar was a touch lower after the US dollar "recovered some strength amid higher US bond yields".
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AEST = Australian Eastern Standard Time which is 10 hours ahead of GMT (Greenwich Mean Time)