Australia: Market falls ahead of rate decisions

Australia stock market finished lower for a second consecutive day on Tuesday, 31 January 2023, as traders opted to book recent profits amid caution ahead of U.S. Federal Reserve and local central bank's policy decisions.

At closing bell, the benchmark S&P/ASX200 index was down 4.99 points, or 0.07%, to 7,476.66. The broader All Ordinaries index declined 14.24 points, or 0.18%, to 7,686.15. For the month the benchmark gained 6.2%

Total 6 of 11 sectors ended lower along with the S&P/ASX 200 Index. Information Technology was worst performing sector, erasing 0.74%, followed by A-REIT (down 1.1%), materials (down 0.76%), and telecommunication services (down 0.6%). Consumer staple was the best performing sector, gaining +2.33%, followed by healthcare (up 1.43%).

The top performing stocks in S&P/ASX200 index were WOOLWORTHS GROUP and CORPORATE TRAVEL MANAGEMENT, up 3.77% and 2.68% respectively. The bottom performing stocks in S&P/ASX200 index were MEGAPORT and SAYONA MINING, down 24.74% and 11.86% respectively.

The Federal Open Market Committee meets on Tuesday and Wednesday, when the Fed is expected to hike rates by one-quarter of a percentage point. Investors will be looking for clues about how much higher the central bank will take rates in the fight against inflation.

Meanwhile, Reserve Bank of Australia is expected to raise the interest rate by 25 basis points next week, with a sharp drop in December retail sales suggesting less need for further policy tightening.

Shares of material companies declined, with Lynas Rare Earth minerals took a 3.3% hit. However, the heavyweight miners, BHP, Rio Tinto and Fortescue, all finished higher.

Shares of financials declined with NAB and Westpac were the two big four banks ending Tuesday with a slight dip of 0.13% each.

ECONOMIC NEWS: The Australian Bureau of Statistics said on Tuesday that the value of retail sales in Australia was down a seasonally adjusted 3.9% on month at A$34.472 billion in December, following the 1.4% increase in November. On a yearly basis, retail sales climbed 7.5%.

The Reserve Bank of Australia said on Tuesday that private sector credit in Australia was up 0.3% on month in December. On a yearly basis, private sector credit climbed 8.3%.

CURRENCY NEWS: The Australian dollar was stood at 0.7011 against greenback on Tuesday, down by 0.7% from previous trading day closure at 0.7059 after trading in the range of 0.7004-0.7066.

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