AU Evening Wrap | ASX 200 Decline Amid Weak Energy and Resources

Moody's Ratings forecasts that Australia's economy will be weighed down by high interest rates, with real GDP growth slowing to 1.5% in 2023. Inflation is expected to cool to the upper end of the RBA's target range by late 2024, but risks remain for higher levels. The RBA is likely to await stable price pressures before easing rates, anticipated to start in the first half of 2025. Job vacancy declines and rising unemployment are expected to dampen consumer sentiment and purchasing power in 2024, with GDP growth rebounding to 2.3% in 2025.

The Australian sharemarket experienced its steepest decline in three weeks on Thursday, influenced by a weak lead from Wall Street and a sharp 9% drop in Nvidia’s stock after disappointing guidance. The S&P/ASX 200 Index fell 0.3%, or 26.3 points, to 8045.1, retreating from a record high earlier this month. The All Ordinaries also decreased by 0.3%. Out of 11 sectors, only three ended in positive territory, with financials leading the gains. The big four banks rose, led by Westpac, which increased by 0.8% to $31.07. Local investors also analyzed profit results from companies including Qantas and Wesfarmers.

Consumer-related stocks suffered, with Wesfarmers dropping 4.1% to $74.06 despite announcing higher 2024 profits and dividends. The stock's high valuation, at 31 times next year's earnings, makes it more expensive than major tech giants. Hugh Dive of Atlas Fund Management expressed satisfaction with the results but acknowledged some investor disappointment. Online fashion retailer Cettire plunged 20% to $1.06 after warning of continued soft trading and delayed auditor approval, following a prior earnings warning. Mineral Resources fell 8% to a three-year low of $40.61 after skipping its final dividend due to weak lithium prices. Contrarily, IGO rose 1.3% to $5.32 despite halving its dividend and reporting a significant profit drop.