The Australian market bounced off its opening lows this morning, only to fall back into negative territory this afternoon. The ASX 200 closed 0.07% lower with nine of the 11 GICS sectors ending in the red.
Energy stocks, however, closed 2.75% higher after WTI crude oil prices rallied to one-year highs of more than US$94 a barrel — a result of low stockpiles at a US storage facility. Woodside Energy gained 2.75%, Santos added 3.26% and Karoon surged by 4.35%.
Materials also managed a slight gain for the day. The falls were led by Consumer Discretionary stocks (-1.09%) in response to ABS retail sales figures.
Brickworks lost 6.61% after posting a 54% drop in full-year net profit to $395 million, while total revenue rose 8% to $1.18 billion. It declared a final dividend of 42¢ a share and a full-year dividend of 65¢ a share.
The building materials group says the housing shortage is worse than expected but a backlog of construction work should support a rebound in company profits.
ABS retail sales
The ABS today reported a bunch of economic data, including a continued slowdown in monthly retail sales in August, adding to arguments for the RBA to leave rates on hold next week.
The total value of retail turnover rose just 0.2% as food retailing and household goods spending shrank, while supported by clothing, footwear and personal accessories retailing, and spending at cafes and restaurants.
ABS head of retail statistics Ben Dorber said the modest increase in retail spending showed consumers "continued to restrain their retail spending" last month.
"Considering how high inflation and strong population growth has added to retail turnover in the past year, the historically low trend growth highlights just how much consumers have pulled back in response to cost-of-living pressures.”
However, spending did get support last month from the 2023 FIFA Women's World Cup as people got out to watch the matches and increased spending across cafes, restaurants and takeaway food outlets.
eToro market analyst Josh Gilbert said, "In 2023 so far, the average consumer has been highly pessimistic but ultimately resilient. However, today’s reading on retail sales shows that demand is softening and supports the case for the RBA to keep rates on hold, as it’s likely the economy will continue to slow down over the coming months.
"The strength of the consumer has taken many by surprise this year, especially with the aggressive stance from the RBA since the start of the year. Today’s reading will be a number the RBA is happy to see, and it’s a sign that the impact of their tightening is taking effect. Ultimately, it's hard to imagine retail sales picking up meaningfully from here – outside of the usual Christmas jump.
"The bottom line is that it’s hard to envisage another hike in 2023 from the RBA after the data we’ve seen in the last two days. Q3 CPI will be the big obstacle, but if that hurdle can be overcome, investors will be laser-focused on rate cuts in 2024."
The ABS also released data on household wealth, showing household wealth rose 2.6% ($379 billion) in the June quarter for its third straight quarterly gain.
These gains were largely driven by rising home prices with population growth supporting demand for housing while the supply of both new and established dwellings to the market remained constrained.
In the three months to August, job vacancies fell by 8.9%, or 37,900 vacancies, for the fifth consecutive quarterly decline. Yet the level of job vacancies remains 71.5% higher than re-pandemic levels in February 2020.
The ABS attributes the high level of job vacancies to ongoing labour shortages in many industries.
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