Investors reacted sharply to comments made by former US President Donald Trump regarding inflation, leading to a significant sell-off in the Australian market. Trump’s assertion that inflation was “way down” sent the benchmark ASX200 down by 45.4 points, or 0.51 percent, closing at 8,927.70, while the broader All Ordinaries fell 46.2 points, or 0.5 percent, to finish at 9,196.80.
The decline in the Australian market was broad-based, with seven of the eleven sectors closing lower. Key contributors to the downturn included information technology, consumer discretionary, and the major banks. Shares in WiseTech Global fell 3.45 percent to $98.28, while Xero dropped 4.05 percent to $156.96. Additionally, technology firm Technology One saw a decline of 2.63 percent, ending the day at $38.92. The four major banks also weighed heavily on the index, with Commonwealth Bank shares down 0.79 percent to $168.95, Westpac slipping 0.93 percent to $38.25, NAB declining 0.58 percent to $42.54, and ANZ falling 0.30 percent to $33.57.
Despite the overall market downward trend, some sectors experienced gains. Notably, gold and silver prices surged following Trump’s remarks on social media. He stated, “Prices are WAY DOWN in the USA, with virtually no inflation.” His comments were accompanied by criticisms of energy policies, which he claimed were detrimental. This statement influenced safe-haven assets, with gold reaching an intraday high of USD 3,477, up from USD 3,438, while silver hit its highest level since 2011, climbing to USD 40.54.
Market analyst Tony Sycamore from IG noted that Trump’s statements added to ongoing concerns regarding the independence of the Federal Reserve amid rising inflation. He explained that political pressure on the Federal Reserve to cut rates, combined with a recent core inflation reading of 2.9 percent, could lead to a renewed trend of selling US assets.
In the commodities sector, Vivek Dhar, a senior commodities analyst at Commonwealth Bank, indicated that gold, silver, and copper prices might continue to rise if the US dollar weakens. He highlighted that these commodities tend to be more responsive to financial market developments compared to others.
In company-specific news, shares of Harvey Norman increased by 8.56 percent to USD 7.48 as analysts responded positively to the retailer’s reports of increased sales attributed to artificial intelligence. Meanwhile, Pro Medicus experienced a slight gain of 0.05 percent, reaching USD 298.96 after announcing that its US subsidiary, Visage Imaging, had received operational authority from the US Department of Veterans’ Affairs.
Conversely, shares in defense shipbuilder Austal fell by 1.16 percent to USD 7.68, following the announcement of the retirement of its inaugural chairman and founder, John Rothwell, as a non-executive director.
Overall, the day’s trading reflected a complex interplay of political statements and market dynamics, highlighting the ongoing volatility in both local and international financial landscapes.
