BHP drags shares lower, traders expect RBA on hold in 2024
Tom Richardson
Hotter-than-expected Australian inflation data continued to push Australian bond yields higher overnight as traders all but priced out the chances of interest rate cuts from the Reserve Bank in 2024.
The rise in risk-free rates sent the S&P/ASX 200 down 0.8 per cent in early trade as the interest rate sensitive real estate, financials and technology sectors fell.
The worst performing sector is materials, down 1.7 per cent and dragged lower by a 3.9 per cent tumble for BHP after the mining giant revealed a $56 billion bid for British peer Anglo American.
Australian 10-year bond yields jumped 15 basis points to 4.55 per cent, with the Australian 1-year yield up 7 basis points to 4.31 per cent just below the cash rate of 4.35 per cent.
US stocks fell after the country’s GDP data came in below expectations at 1.6 per cent for the March quarter and a key inflation measure came in higher than expected.
“The US Q1 GDP report delivered the worst of both worlds, softer than expected growth and higher than expected inflation,” said National Australia Bank’s economics team.
“The US Treasury market honed in on the bad inflation news, further delaying Fed rate cuts with yields jumping across the curve. US equities didn’t like the growth/inflation news either, but its performance has also been affected by big tech earnings reports.”
On Wall Street Microsoft and Alphabet beat earnings expectations, with Google-parent Alphabet declaring its first-ever dividend and its shares pointed 11 per cent higher in after hours markets to a record high.
Atlassian shares fell 6.5 per cent in after hours markets after it posted earnings and said its co chief executive Scott Farquhar will resign.
Traders pushed back expectations of an interest rate cut from the US Federal Reserve to November. The Australian dollar rose 0.3 per cent to buy $US65.2¢.
