ASX drops after sizzling US CPI; Atlassian to purchase US Loom for $1.5b; Pact board say reject billionaire Geminder’s buyout
Australian share opened in line with losses on Wall Street, after the latest US inflation data renewed bets that the Federal Reserve is not yet done lifting interest rates.
The S&P/ASX 200 dropped 50 points, or 0.7 per cent at open, to 7040.6. The All Ordinaries was also down 0.7 per cent.
Rate sensitive companies were sold off with real estate the worst performing of the 11 sectors to be down 1.5 per cent. Utilities stocks were the only group to move higher in early trade to be up 0.3 per cent.
Meanwhile, the local currency plunged 1.6 per cent overnight below US64¢ and is trading at around US63.13¢ with the US dollar set to post its best session in five weeks. Looking ahead, CPI and PPI from China will be released just after midday.
What happened overnight
The US sharemarket turned lower, with the S&P 500 down 0.6 per cent, after US core consumer prices, which exclude food and energy, rose 0.3 per cent last month. Headline prices were 0.4 per cent higher. Both metrics were forecast to rise 0.3 per cent.
The year-on-year growth rate held at 3.7 per cent, whereas economists had forecast a drop to 3.6 per cent.
“I think the [Fed’s policy committee] would look at this and still conclude that underlying inflationary pressures remain too hot for their liking,” Scotiabank’s Derek Holt said.
The yield on the US 10-year note surged 13 basis points to 4.69 per cent at 4.30pm in New York. The two-year yield, more sensitive to rate moves, reached 5.07 per cent, and the 30-year yield was at 4.86 per cent.
Stocks on the move
Pact Group fell 1.4 per cent after billionaire Raphael Geminder’s plan to take his struggling packaging company off the ASX hit a major speed bump. Shareholders being urged to reject the deal following an independent review.
ResMed is trading 2.4 per cent lower and near its 52-week low following a note from brokers at RBC, which that downgraded stock to perform from outperform.
Bega Cheese is up 1.6 per cent after analysts at Bell Potter upgraded the foods business to a buy rating.
Perpetual is up 1.4 per cent after its assets under management held steady in the September quarter, in a sign flows may be stabilising for the struggling funds management firm.
Harvey Norman shares, which trade ex-dividend as of today, are down 3.9 per cent.
Fletcher Building will brief investors and analysts later today to provide an update on its Western Australian plumbing issues. Shares remain in a trading halt and last traded at $4.45
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