ASX snaps five-day winning streak

The Australian share market snapped a five-day winning streak on Thursday as investors sold off financials and consumer discretionary stocks amid renewed concerns over anaemic household consumption.

At the closing bell, the S&P/SASX200 slipped 1.1 per cent, or 82.9 points, to 7721.6, with eight of 11 industry sectors finishing in the red. Meanwhile, the broader All Ordinaries fared slightly better, sliding 1 per cent to 7994.2.

The Australian dollar was flat against the greenback, buying US65.77c.

ASX snaps five-day winning streak

IG Australia market analyst Tony Sycamore said investors were increasingly anxious that inflationary pressures, coupled with a run-down of pandemic-era savings would weigh on consumption.

“There are concerns that when we look at what the RBA is providing in terms of guidance, it doesn’t encourage consumers to go out and spend … that’s coming through in the retail sales data,” Mr Sycamore said.

“Households are tightening their budget, savings that they accumulated over Covid-19 are certainly being eaten into.”

The ASX followed a mixed session on Wall Street overnight. While the Dow Jones index added 0.4 per cent, extending its longest winning streak of the year, the tech-heavy Nasdaq dropped 0.2 per cent and the S&P500 was flat.

On the local benchmark, consumer discretionary stocks were the biggest laggards, slumping 2.6 per cent, as a series of trading results across the sector heightened investors’ anxieties.

Infant supplies retailer Baby Bunting was the worst performer in the sector, tumbled 23.4 per cent to $1.46 after it downgraded its pro forma profit guidance to between $2m and $4m for the current financial year. Sales shed 7.4 per cent in the 12 months to April 30.

Elsewhere in the sector, JB Hi-Fi sank 4.5 per cent to $57.25, Harvey Norman slumped 4.3 per cent to $4.24 and BCF, Supercheap Auto and Rebel Sports parent Super Retail Group fell 5.2 per cent to $13.06 after it unveiled a 5 per cent drop in the sales year-to-date.

Earlier this week, fresh data released by the Australian Bureau of Statistics showed retail volumes fell for the fifth time in the last six quarters as consumers trimmed their discretionary spending.

Financials also experienced a sharp sell-off, down 1.7 per cent, with Commonwealth Bank on Thursday the last of the big four banks to release its latest results which showed profits slid 5 per cent on the previous March quarter to $2.4bn. Shares traded 2.2 per cent lower to $117.09.

In a March quarter update, the nation’s largest lender said that while Australia’s economic fundamentals remained solid, it had experienced a rise in arrears across home, personal and credit card lending.

CBA’s rivals also finished lower, led by Westpac which plunged 5.6 per cent to $26.32, while NAB fell 1.3 per cent to $33.52 and ANZ slipped 1.1 per cent to $28.79.

The materials sector also finished lower, down 0.5 per cent. With BHP off 0.7 per cent to $43.06 and Fortescue down 0.9 per cent to $26.41. Rio Tinto was flat at $130.23 apiece.

In other corporate news, explosives manufacturer Orica jumped 0.6 per cent to $18.40 after it unveiled a 10 per cent jump in earnings in the six months to March 31.

Westfield operator Scentre Group warned shareholders it would hike operating costs following the massacre at its Bondi Junction premises that left six, including one of its security guards, dead. Shares traded 1.9 per cent lower to $3.16.