CBA, BHP drags Aussie sharemarket to worst day since May

Australia’s sharemarket slumps to its worst day since May, as local traders fear higher than expected US inflation rates and factor in fewer interest rate cuts.

The benchmark ASX200 fell 68.50 points or 0.79 per cent to 8,561.80, retreating from Tuesday’s record high.

While the broader All Ordinaries also fell 58.90 points or 0.66 per cent to 8,816.40.

Australia’s dollar is on

The falls were broadbased, with nine of the 11 sectors finishing in the red, led by falls from the major banks and miners.

Australia’s sharemarket wobbles follows a weak lead in from Wall Street on the back of stickier inflation in the US.

This was taken as the first sign of President Donald Trump’s tariff policy increasing inflation with core CPI, which excludes food and energy, up 0.2 per cent in June coming in at 2.9 per cent in line with economists forecasts.

This was the highest level since February.

“Tariffs are starting to bite,” Navy Federal Credit Union chief economist Heather Long told CNN.

“It wasn’t as bad as expected, but you can see it in the data.”

Mr Trump said the inflation rate is still low and criticised Fed chair Jerome Powell for not lowering interest rates.

“Jerome Powell is too late … interest rates should be coming down,” President Trump said.

“We should have the lowest interest rate anywhere in the world, and we don’t.

The major banks led the falls locally with CBA falling 1.22 per cent to $177.57, while NAB slumped 3.38 per cent to $38.27, Westpac slid 1.45 per cent to $33.30 and ANZ fell 0.56 per cent to $30.12.

The mining sector also had mixed results with strong gains out of the rare earth producers offset by falls in the gold miners.

Northern Star resources fell 2.15 per cent to $16.42, Evolution Mining is down 2.34 per cent to $7.52 and Newmont slumped 5.73 per cent to $87.70.

Shares in the major iron ore miners were mixed, despite the price of the commodity rising back above $US100 per tonne after Chinese GDP came in at 5.2 per cent for the year, beating expectations.

Despite the price of the commodity rising, BHP shares fell 0.71 per cent to $39.11.

Rio Tinto shares rose 0.22 per cent to $110.52, while Fortescue closed higher up 0.48 per cent to $16.86.

Kosec founder and chief executive Michael Kodari said Australia’s major miners would likely benefit from President Trump’s big tariff policy, which could push commodities including copper to record high prices.

“The copper market is facing a growing undersupply, with forecasts indicating a significant deficit in the coming years given the huge global demand we are likely to see,” he said.

“Several factors, including increased demand from the energy transition and limitations in mining output, are contributing to this imbalance.”

In company news, developers Lendlease dropped 1.74 per cent to $5.09 after the business told the market it plans to build a luxury apartment complex overlooking Sydney’s Hyde Park with an estimated end value of $2.5bn.

The business says it will be home to 300 apartments as well as offer 2,000 square metres of retail space.

DroneShield continues its run higher, soaring another 3.76 per cent to $3.86 to close at its fourth record high in a row.

Investors are continuing to buy up the share after announcing major contract wins as well as an R & D and manufacturing capacity expansion on Monday.