AU Evening Wrap: Australia Shares Tumble 1.3% as Rate-Cut Hopes Fade
Market Performance
Australia's $S&P/ASX 200 (.XJO.AU)$ closed 1.3% lower at 7665.6, sinking to its heaviest loss in more than a month as economists pushed back forecasts for interest-rate cuts on hotter-than-expected inflation. The benchmark index was already in the red when data was published showing annual CPI rose 3.6% in April. With economists having forecast a fall to 3.4%, the ASX 200 sank even lower.
All eleven sectors finished down, with consumer staples and financials leading the way. Banks $CommBank (CBA.AU)$, $National Australia Bank Ltd (NAB.AU)$, $Westpac Banking Corp (WBC.AU)$ and $ANZ Group Holdings Ltd (ANZ.AU)$ -- which comprise about 20% of the ASX 200 by market capitalization and typically expand margins when rates are falling--lost between 1.6% and 2.45%.
Top News
Australian Inflation Indicator Rises in April
Consumer price pressures in Australia rose unexpectedly in April, sending a warning to the Reserve Bank of Australia to remain vigilant. The monthly consumer-price index indicator rose 3.6% in the 12 months to April, compared with 3.5% in March, according to the Australian Bureau of Statistics. This increase in inflation affirms the central bank's decision earlier this month to put the possibility of a further interest-rate rise back on the table. Economists had expected a fall to 3.4%.
BHP Requests Extension for Anglo American Takeover Deal
$BHP Group Ltd (BHP.AU)$ has requested an extension to negotiate a $75 billion takeover deal with $ANGLO AMERICAN (AAUKF.US)$, after failing to convince the South African industrial giant's directors during extended talks.
British takeover laws require BHP to make a formal offer for Anglo American by May 29th, but it appears that a deal is unlikely to be struck by the deadline. Despite this, BHP has asked Anglo American to extend the deadline for a second time, indicating that the company has not given up hope of reaching an agreement. The outcome of these negotiations could have significant implications for the mining industry and broader economic trends.
Source: Dow Jones Newswires, AFR, ASX
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