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Chapter 1: What recent trends are affecting the Australian share market?
a listener production.
The Aussie market takes a breather. Will we manage to end a four-day losing streak though? And what does today's inflation data mean for interest rate hikes? Good afternoon, I'm Steve Daglian. It's Wednesday the 24th of June. Welcome to the CommSec Market Update. Well, a much more encouraging performance from the Aussie market, at least as we head into the close.
Another choppy performance, really, if we look at how we've done over the past week. It's been the case where we've had, on a daily basis, markets, for the most part, improving at times and then actually heading into negative territory as well. But at the moment, we've got the ASX 200 lifting around 20 points, and that's a gain remarkable.
Chapter 2: How did mixed inflation data impact investor sentiment today?
of around a quarter of a percent. So no huge improvement, but if we managed to hold on, it would end a bit of a losing streak that we've had recently. Four straight days of declines, 2% worth of declines over that period as well. Now, there was a bit of caution earlier in the day.
The market was almost completely flat over the first 90 minutes of trade, and that was ahead of highly anticipated data on inflation for the month of May. Now, this came out quite mixed today. Headline inflation actually cooled. That was weaker than expected with lower fuel prices helping. So that was encouraging.
The bad news was that trimmed mean or underlying inflation, which is the number that the Reserve Bank watches most closely when it makes those interest rate calls every six to eight weeks, that was hotter than expected. So overall, still a slightly positive response by the market. Headline inflation over the year on an annual basis eased to 4%.
So it still is way too high, but it was down from 4.2% last month. And again, a little weaker than what the market was expecting. And trim mean actually rose from last month and was slightly hotter than expected, but only just a to 3.6%. So I think at the end of the day, it probably will just keep the Reserve Bank on high alert when it meets next in August. That's roughly seven weeks away now.
And it doesn't change the fact that on its own, it probably won't be enough to really alter outlook. A lot of data recently has been pretty weak on jobs, on spending, home prices, consumer confidence, and more. And we're seeing some degree of progress being made in the Middle East, it seems.
So ahead of the data, the market thought there was a 31% chance of an August rate hike and about a 54% chance of a lift by December. After the data was handed down, the market's now pricing in roughly a 32% chance of a hike in August. So no big changes. So all eyes from here will certainly be on employment numbers, which are out in 24 hours time.
Now, something that has weighed on markets a little is the fact that there's been a little bit of a tech sell-off in the United States. Particularly, the NASDAQ has been held back quite significantly in overnight trade. So there's been some pretty heavy selling in semiconductor stocks as investors have been asking questions around the growing debt-funded spending on AI.
Major beneficiaries of the AI boom like Micron were down 13% last night. Some people might not be familiar with the chipmaker, but it's the ninth largest stock in the United States at the moment. And together with the likes of Intel, it has more than tripled in share price on the market just this year. So that has certainly helped with the market cap expansion.
Now, a big test for Micron will actually be, and for other AI-related stocks, will come early tomorrow morning when it releases its latest quarterly results. And that will be after the closing bell on Wall Street. And it could certainly provide a bit of a catalyst for chip makers for the rest of the week. And that's going to be certainly something to watch.
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Chapter 3: What does the latest inflation data signal for interest rates?
So just on iron ore, it's fallen now for seven consecutive days. It's down about 7% in June, which if nothing changes in the next week or so, would make it the worst month in about two years for iron ore. And that's partly because demand remains pretty weak coming out of China at the moment for the steel making ingredients. So China's property market is
has struggled for quite some time, but it accounts for almost a third of China's steel demand and consumption. So when its property market is struggling, it can be a little bit of a negative for iron ore. And there's been roughly a 25% slump in the number of new properties that have started being built in China over the past year.
Looking at some individual names there, we've got WiseTech standing out. It's up 14.3%. 3% today. But again, it has lost roughly a quarter of its value over the past four days, sank to a five-year low at the start of the week as well. And that was on news that the Australian Federal Police was launching an investigation into its founder, Richard White.
And just remember that at one stage, WiseTech was easily the largest stock in Australia's tech sector, and that Mr. White's wealth was sitting at about $15 billion or close to it. Now the entire company has a market cap of about $10 billion. And Richard White's holding, he owns roughly 34% in the company. Xero is up 7.5% as well. This is the accounting software group.
Hasn't had a great week so far, but a broker mentioned today that the planned price rises for its products in the UK could certainly help average revenue per user by about 5% or boosted by 5%. So the stock managed to lift today. And CSL is up around 2.6% today. It's actually the first lift of the week, but it's had three very strong weeks on the local market. It does have a very long way to go.
If it's going to get back to the heights it reached back in 2020, when it was sitting at $342 per share, it's now sitting at about $114 per share. So it's had repeated downgrades in in its profit estimates and goals for the last 12 to 18 months. And that could certainly do it. As far as the losers are concerned today, we've had baby bunting underperforming. It's down about 12%.
The retailer of baby products, things like prams and cots is down quite heavily because it lowered its profit targets for the year, which it blamed on softer than expected sales over the past quarter. So it highlighted early on in the update that sales are still going to grow about 6% and that profits are still higher as well overall.
But importantly, the market's focused on the performance that it highlighted in the past few months. So the CEO said that the three rate hikes they had this year, higher fuel prices, that's all weighed on consumer spending and just added to cost for distribution, getting the products around the place as well.
We've also had some pretty heavy declines from the likes of Beach Energy, Auroband Mining, oil and gas companies, gold producers. They've all struggled across the board. And IAG as well, the owner of NRMA, which received a broker downgrade. So let's look forward from here because tonight, as I said, there will be a couple of things to watch.
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