Australian Shares Retreat Ahead of Labor Market Data

Australian stocks dropped 39 points or 0.4% to 8,773 on Thursday morning session after closing slightly higher in the prior session. The decline followed extended weakness on Wall Street's S&P 500 and Nasdaq overnight after a major rout in the tech sector earlier this week. Locally, nerves grew ahead of labor market figures for May, after April’s jobless rate rose to 4.5%, the highest since late 2021, while employment unexpectedly fell. Meanwhile, Reserve Bank's Deputy Governor Andrew Hauser warned that inflation remains too high, stressing more policy work is needed to return to the 2–3% target. Wednesday's print showed Australia's headline inflation eased to 4.0% in May from April's 4.2%, but core inflation accelerated to 3.6%. Non-energy minerals, energy minerals, and industrial services faced selling pressure, with notable laggards from BHP Group (-0.7%), Worley (-9.0%), Predictive Discovery (-7.2%), and Capricorn Metals (-4.0%). The big four banks shed between 0.8% and 2.9%.

The ASX 200 edged up 21 points or 0.2% to finish at 8,808 on Wednesday, snapping a four-session slide as softer May headline inflation supported sentiment despite core readings running a touch hot. In Asia, markets mainly advanced as U.S. stock futures ticked up amid easing tensions in the Middle East, with tanker traffic through the Strait of Hormuz gradually normalising. Later this week, focus will turn to the U.S. PCE price index and final GDP figures. Gains in local markets were broad across tech services, healthcare, consumer, and commercial sectors, offset by weakness in energy and mining. Three of the big four banks rose between 0.1% and 1.2%, while Wisetech Global rebounded 14.5% after its prior slump. Other standouts included Lynas Rare Earths (4.3%), PLS Group (3.6%), and Pro Medicus (3.9%). In contrast, Woodside Energy slipped 1.4%, and Santos fell 1.0%. Traders now await Thursday’s labor market and household spending data for further cues on domestic resilience.

Australian shares were little changed in Wednesday morning trade, hovering near 8,789 after four straight sessions of losses and lingering at their lowest level in over a week. Traders awaited May CPI data later today, with forecasts pointing to faster annual inflation after April’s 4.2% but a rare monthly decline, the first in nine months. Labor market figures due Thursday also kept sentiment cautious. Meanwhile, U.S. equity futures were muted after a sharp selloff in tech and chipmakers dragged Wall Street lower overnight. Gains in tech services, consumer, healthcare, and commercial sectors helped offset weakness in non-energy and energy minerals. Early local movers included Lynas Rare Earths (2.5%), CSL Ltd. (2.3%), and Aristocrat Leisure (1.5%). In the meantime, two of the four big banks also posted modest gains. On the downside, Genesis Minerals slipped 3.6%, followed by Greatland Resources (-3.5%), Insurance Australia Group (-2.2%), and Perseus Mining (-1.4%).