Australia Shares Retreat as Week Opens

Australian stocks rose 58 points or 0.7% to 8,740 in Wednesday morning trade, snapping two sessions of weakness as stronger U.S. equity futures lifted market sentiment after President Donald Trump announced a pause in operations to reopen the Strait of Hormuz, saying a deal with Iran was close. Locally, industry conditions showed less severe contraction in April. However, gains were capped by caution ahead of March trade data later this week, following February’s rise in exports and fall in imports. On the monetary front, the Reserve Bank raised cash rates for a third straight meeting Tuesday, warning the Middle East oil crisis could fuel inflation and prolong price pressures. Financials, logistics, and consumer durables led gains, offset partly by declines in energy minerals and consumer non-durables. Early standouts included Liontown Ltd. (2.7%), Codan Ltd. (2.0%), Qantas Airways (1.9%), and BHP Group (0.8%). Meanwhile, the four major banks climbed between 1.7% and 3.2%.

The S&P/ASX 200 fell 17 points or 0.2% to close at 8,680 on Tuesday, marking the second session of declines after the Reserve Bank of Australia raised cash rates for the third consecutive meeting to rein in stubborn inflation, in line with estimates. Policymakers noted inflation was already elevated before the Middle East conflict, with higher fuel costs adding pressure. Traders also cautiously awaited March trade data later this week, after February showed exports rising while imports fell. Still, losses eased as Australia's personal spending posted its strongest growth in 2-1/2 years during March, recording a third monthly gain. Meanwhile, U.S. stock futures strengthened as traders eyed the latest developments in the Middle East. Sector weakness was led by process industries, healthcare, and consumer durables. The four major banks retreated between 0.4% to 1.6%, while notable laggards included Sonic Healthcare (-4.2%), Lynas Rare Earths (-2.3%), and Northern Star Resources (-1.7%).

Australian shares dipped 62 points, or 0.7%, to 8,635 in early deals on Tuesday, extending losses from the prior session amid growing caution that the central bank will raise cash rates for a third straight meeting later today, with a further move possible in September amid a battle against persistent inflationary pressures. On the data front, March building permits tumbled 10.5% mom after a strong rebound earlier, while April job ads fell for a second month. Overnight on Wall Street, equities ended lower Monday, with the S&P 500 down from record highs, after a South Korean vessel was struck in the Strait of Hormuz, underscoring Tehran’s grip on Middle East oil flows. Consumer durables, healthcare, process industries, and retail trade drove the losses, though gains in energy minerals and logistics helped cap weakness. Among major laggards were ALS Ltd. (-3.8%), Northern Star Resources (-2.7%), and Ramelius Resources (-1.8%). Four big banks slipped between 0.5% to 0.9%.