ASX gives up gains on inflation surprise

Derek Rose | October 26, 2022

The local share market has given back most of its gains after third-quarter inflation came in hotter than expected. 

At noon AEDT on Wednesday, the benchmark S&P/ASX200 index was up 9.1 points to 6807.8, a gain of 0.14 per cent.

The broader All Ordinaries was up 5.6 points to 6999.3, a 0.08 per cent gain. 

The market had been up as many as 44.6 points, or 0.65 per cent, but fell 19.7 points in the space of two minutes after the Australian Bureau of Statistics released the Consumer Price Index figures at 11.30am AEDT.

The bureau reported that consumer prices rose 7.3 per cent in the 12 months to September 30, compared to consensus expectations of a 7.1 rise.

“This is a very strong inflation print,” said Sean Langcake, head of macroeconomic forecasting for BIS Oxford Economics.

“Nevertheless, it is broadly in line with the RBA’s expectations, meaning it will have a relatively limited impact on their outlook.”

The budget that the Albanese government delivered on Tuesday night was “quite restrained on the expenditure side, and should not add to the inflationary pressures the economy is facing,” Mr Langcake added.

The Australian dollar also jumped on the inflation data, briefly buying as much as 64 US cents, the most since October 7. 

At midday the Aussie was trading for 63.91 US cents, from 63.25 US cents at Tuesday’s ASX close.

Sectors were mixed at midday, with four sectors falling and seven rising.

Consumer staples were down 2.4 per cent with sharp losses for Woolworths, Coles and Endeavour Group as Coles announced first-quarter revenue grew 1.3 per cent to $9.89 billion in the first quarter, compared to a year ago.

Coles shares fell 2.9 per cent to $16.125, Woolworths dropped 3.3 per cent to $32.29 as the supermarket giant held its annual general meeting in Brisbane and BWS and Dan Murphy’s owner Endeavour Group fell 5.1 per cent to $6.95.

The heavyweight mining sector was up 0.6 per cent, with BHP up 0.1 per cent to $38.53, Fortescue Metals basically flat at $16.25 and Rio TInto adding 0.6 per cent to $91.83. 

All the big banks were higher, with CBA up 0.2 per cent, ANZ up 0.6 per cent and Westpac and NAB up 0.5 per cent.

Elmo Software soared 40.6 per cent to $4.64 after the cloud HR software company agreed to be taken over by Los Angeles-based private investment firm K1 for $4.85 a share, or $4.86 million.

Medibank Private plummeted 16.8 per cent to $2.951 as its shares resumed trading for the first time since last Thursday following a devastating hack of customer data.

Medibank withdrew its guidance and said it does not have cyber insurance. It predicted the hack would cost it at least $25m to $35m in non-recurring costs, not including remediation, regulatory or litigation-related expenses that Medibank said were difficult to predict.