ASX Set for More Losses as Budget Absorption, and US Inflation Data Weigh
Synopsis
The ASX 200 is set to fall further on Wednesday after closing down 0.36 per cent to 8,670.70 on Tuesday, a new 20-day low. Wall Street was mixed overnight with the Nasdaq falling 0.% after US CPI rose 3.8% in the year to April, the worst reading since May 2023. Australian markets are also digesting the federal budget confirmed Tuesday night, including the scrapping of the 50 per cent capital gains tax discount and new restrictions on negative gearing. Life360 and DroneShield were Tuesday's worst ASX performers.
It might be another day of losses for the ASX on Wednesday, after the budget was processed, a wobble on Wall Street, and US inflation data took its toll.
Key highlights
- Tuesday, ASX 200’s biggest losers Life360 share price dropped 10.89% DroneShield, down 9.92%
- Dow Jones flat +0.1%, Nasdaq -0.7%, S&P 500 -0.15% overnight Wall St mixed
- US CPI jumped 3.8% yoy to April, the worst print since May 2023, rattling markets.
- Australian markets are continuing to absorb the federal budget delivered Tuesday night with tax changes to capital gains and negative gearing now confirmed.
Tuesday recap, ASX falls to a 20-day low as Budget lands
The ASX 200 dropped 31.10 points, or 0.36 per cent, to 8,670.70 on Tuesday, marking a new 20-day low as markets absorbed the fallout from the federal budget and wider global jitters. The worst on the day was Life360, down 10.89%, followed by DroneShield, down 9.92%. The index is now barely changed on both a five-day and year-to-date basis, a flat but fragile place to enter Wednesday’s session.
The US inflation data, set to be released on Wednesday, is expected to make for a tough week, amid a mixed night on Wall Street.
On Wall Street, U.S. indices finished mixed overnight. The Dow Jones rose 0%, but the Nasdaq lost 0.7% and the S&P 500 fell 0.15%. The main force was the US CPI data released on Thursday which showed inflation rose 3.8% in the 12 months to April, the weakest reading since May last year. The number ignited new fears that the US Federal Reserve would have to keep rates higher for longer, sowing caution across global markets and hitting growth stocks in particular.
The Budget Factor
Australian markets are digesting a federal budget that reaffirms major changes to capital gains tax and negative gearing, amid global noise. The removal of the 50% CGT discount and the restriction of negative gearing to brand-new properties, implemented through a one-year transitional arrangement, represent the most significant change to property investment tax policy since 1999. Investors will be watching to see what the changes mean for years of investment flows and housing-market dynamics, with property-related stocks and real estate investment trusts under scrutiny.
What to Watch Wednesday
Three things will guide Wednesday’s session: further historical budget reaction this week; other global inflation data; and attempts to stabilise oil prices amid the fate of US-Iran talks and Trump’s arrival in Beijing over the coming days. The latter could extend an already tough stretch for Australian equities which sit at a 20-day low with futures pointing the way for further falls on Wednesday. Investors in property, technology and energy stocks should pay attention as all three groups are facing unique challenges at the moment.
FAQs
- Which stocks fell hardest on ASX Tuesday?
Life360 -10.89% and DroneShield -9.92% are the two lowest performing stocks of the index.
- Why was Wall Street in red overnight?
US CPI increased 3.8% YoY in April, highest since May 2023, raising concern markets that the Fed will need to keep rates higher for longer.
- What to expect from the ASX on Wednesday?
SPI futures suggest a 0.1% loss at the open, only a slight drop but enough to extend the malaise of recent days.
Follow Inspirepreneur Magazine for daily global business news.
At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
You Might Also Like
Australia Confused Over Vague Demands From Trump
KPMG Australia CEO and Audit Chief Resigns Over Whistleblower Complaint Handling
