Iron ore giants Fortescue (down 3.6 per cent) and Rio Tinto (down 1.5 per cent) retreated after the price of the steelmaking commodity fell 1.2 per cent. BHP finished flat before releasing a statement just before the close of trading asking for an extension to its takeover talks with smaller rival Anglo American.

Loading

Meanwhile, insurance giant IAG lost 3.1 per cent after law firm Slater and Gordon launched a class action over loyalty discounts on home insurance policies.

The lowdown

Rattling the local market was consumer price index data for the month of April, which came in at 3.6 per cent year-on-year, up from 3.5 per cent in March. Economists had expected that figure to ease to 3.4 per cent. The Reserve Bank is looking for inflation to fall to its 2 to 3 per cent target range before it begins cutting interest rates.

Consumer-related stocks led declines on the index, with the consumer staples sector (down 2.1 per cent) weighed down by supermarket giants Woolworths (down 1.3 per cent) and Coles (down 2 per cent). The consumer discretionary sector (down 1.5 per cent) also struggled, with Wesfarmers and Harvey Norman both down about 1.1 per cent.

The data means the Reserve Bank of Australia will be unlikely to hike rates – but also won’t be entertaining any rate cuts any time soon either, according to RateCity.com.au research director Sally Tindall.

‘Australia’s progress in the battle against high inflation has the wobbles. The RBA will need to see this swing right around before it’s going to entertain the possibility of cash rate cuts.’

RateCity.com.au’s Sally Tindall

“The central bank is likely to be in a prolonged ‘wait-and-see’ period,” Tindall said.

“Australia’s progress in the battle against high inflation has the wobbles. The RBA will need to see this swing right around before it’s going to formally entertain the possibility of cash rate cuts.”

“If you’ve got a mortgage, understand your rate isn’t moving any time soon unless you do something about it.”

HSBC also reiterated its “higher for longer” view on interest rates.

Loading

“Our central case is that the RBA’s cash rate will be on hold through 2024 with rate cuts not beginning until [the second quarter of] 2025,” HSBC chief economist Paul Bloxham said in a note.

Overnight in the United States, nearly three out of every four stocks fell in the S&P 500.

But strength for a handful of highly influential Big Tech stocks nevertheless helped the index hold up overall. It edged higher by less than 0.1 per cent.

The Dow Jones fell 0.6 per cent. The Nasdaq Composite rode the strength of tech stocks to rise 0.6 per cent and added to its latest all-time high set on Friday.

The week’s highlight likely arrives on Friday when the US government releases its latest monthly report on spending by households and the incomes that they earned. It will also include the measure of inflation for April that the Federal Reserve prefers to use.

Tweet of the day

Quote of the day

“A number of roles will change and some people will regrettably leave our business”: That’s News Corp Australasia executive chairman Michael Miller in a message to all staff as the publishing empire begins shedding staff amid a major corporate restructure to adjust to falling revenues across the media industry.

You may have missed

Tigers Realm will take steps to delist from the Australian Stock Exchange after shareholders approved a fire sale of its Russian coal mines to a Russian businessman that the chairman conceded may have had former connections to oligarchs sanctioned by the federal government.

The ASX-listed miner will sell its operations – two coking coal mines and an export terminal in Russia’s far east – to APM Invest, owned by Mark Buzuk, for $US49 million ($74 million) after the Federal Court in April ruled Tigers Realm was in breach of sanctions against Russian interests following the Ukraine invasion.