Trade, inflation send ASX lower

Australian shares slipped towards their first loss in eight sessions on news of a rise in inflation and a possible delay in a US-China trade deal.

The ASX 200 declined 45 points or 0.7 per cent to 6701 by mid-session. The S&P 500 closed three points or almost 0.1 per cent weaker overnight after a US trade official warned that Donald Trump’s “substantial phase one trade deal” may not be completed in time for the president and his Chinese counterpart to sign at next month’s APEC summit.

Mining stocks led the initial retreat as hopes for a pick-up in Chinese demand for raw materials were once again tempered. Index heavyweights BHP and Rio Tinto both slid 1.4 per cent. Fortescue lost 2.2 per cent.

The market extended its losses and the dollar rebounded after a report showed inflation ticked higher last quarter. The annualised consumer price index edged up to 1.7 per cent from 1.6 per cent. A trimmed mean measure favoured by central bank policymakers came in at 1.6 per cent, as expected. The dollar bounced 16 basis points when the report was released as the remote prospect of a rate cut next week decreased further. The Aussie was lately buying 68.61 US cents.

Rate-sensitive consumer stocks came under pressure. Woolworths slumped 1.9 per cent after revealing it may have underpaid 5,700 store workers by up to $300 million before tax. The supermarket’s salary blunder overshadowed news of a 7.1 per cent increase in sales over the last quarter. Shares in rival Coles eased 1.1 per cent. Bega Cheese declined another 4.9 per cent on the back of yesterday’s profit warning.

The tech sector reversed yesterday’s gains following overnight weakness among US technology stocks. Altium shed 4.5 per cent, Afterpay 2.2 per cent and Wisetech 2 per cent. Overnight, the Nasdaq bore the brunt of the US sell-off, falling 0.6 per cent.

Mortgage insurer Gemworth rose 12 per cent to a record high after raising profits and renewing its largest contract. The company announced a 28 per cent lift in net profit after tax to $25.1 million last quarter from $19.6 million during the same period last year. Adding to the positive mood was news that Commonwealth Bank had renewed its Supply and Service Contract for another three years.

The big four banks moved firmly lower. CBA gave up 1 per cent, ANZ 0.9 per cent, NAB 0.8 per cent and Westpac 0.7 percent.

What’s hot today and what’s not:

Hot today: Chase Mining almost doubled in value after the junior explorer announced it had struck wide massive sulphide zones at its Alotta prospect in Canada. The share price surged from 2.7 cents to a peak of 5.2 cents before lately trimming its gain to 1.1 cents or 40.7 per cent. The company only started diamond drilling over the weekend, and this morning announced it had hit the largest mineralised intercept to date at the Quebec site. Chase intends to drill a further four to five holes targeting extensions to known mineralisation.

Not today: buy-now-pay-later companies have enjoyed extraordinary growth over the last year, leaving them vulnerable to heavy sell-offs on any sign of faltering. Z1P shares dived 7.8 per cent this morning despite the company announcing record quarterly revenue and transaction volume. While the company reported gains in all of its key operational metrics, investors may have been troubled by a slight uptick in bad debts and an increase in cash operating costs.

Asian markets retreated. China’s Shanghai Composite shed 0.2 per cent, Hong Kong’s Hang Seng 0.1 per cent and Japan’s Nikkei 0.3 per cent. S&P 500 index futures were recently down two points or 0.1 per cent.

Turning to commodity markets, Brent crude futures declined 17 cents or 0.3 per cent this morning to $US61.42 a barrel. Gold futures edged up $1 or 0.1 per cent to $US1,490.70 an ounce.