The Australian share market has closed basically flat after retail sales figures smashed consensus expectations, reigniting fears the Reserve Bank would raise interest rates at its next board meeting.
The S&P/ASX200 was modestly in the green on Thursday morning but fell by a third of a percentage point following the Australian Bureau of Statistics release.
The benchmark index finished Thursday marginally down 1.6 points, or 0.02 per cent, to 7,194.9, while the broader All Ordinaries rose 5.5 points, or 0.07 per cent, to 7,389.6.
Retail trade for May grew by 0.7 per cent, well above the consensus estimate of 0.1 per cent.
Persistent consumer resilience contrasts with the sharp fall in inflation recorded on Wednesday, which had the futures market pricing in just a 16 per cent chance of a July 4 rate hike, according to the ASX's RBA Rate Indicator.
ANZ senior economist Adelaide Timbrell says the figures support the case for the RBA to lift the cash rate by a further 25 basis points.
“We think today’s data, along with the strong May labour force release, outweigh yesterday’s softer than expected headline CPI print," she said.
Job vacancies fell two per cent between February and May but still remain 90 per cent higher than pre-pandemic levels.
NAB economist Taylor Nugent agreed with Ms Timbrell's forecast of two more rate hikes in the coming months.
“The strong result pushes back on fears that the economy was slowing more sharply than expected and highlights ongoing resilience among consumers, with resilience also seen in the labour market," he said.
While one month of data would not "emphatically shift the dial", the outcome contrasted the RBA's assessment of a significant slowdown in consumption, Mr Nugent said.
After Thursday's close, the futures market was back to pricing in a rate hike at 28 per cent.
Tech stocks were the best performers on the index, up 1.7 per cent on average, with electronic payment provider Tyro jumping 9.2 per cent to $1.19.
Logistics software provider WiseTech was another strong performer, up 2.2 per cent to $79.35, while accounting software company Xero climbed 2.3 per cent to $117.28.
ANZ was the best of the big banks, jumping 1.2 per cent to $23.71, while CBA was up 0.5 per cent and Westpac moved 0.1 per cent higher.
NAB gained 0.4 per cent after announcing former KPMG Australia chair Alison Kitchen would be joining the board.
The heavyweight miners were mixed with BHP and Rio Tinto dropping 1.0 and 1.2 per cent respectively, while Fortescue Metals grew 0.5 per cent.
Transurban sank 2.1 per cent to $14.19 after the competition watchdog flagged concerns about the toll road operator's proposed takeover of Melbourne's EastLink freeway.
Watchdog chair Gina Cass-Gottlieb said she has concerns the proposed acquisition could deter the emergence of a key rival to Transurban for future toll concessions.
Real estate listings website Domain reached a 10-month high, rising 5.1 per cent to $3.71.
Gas producer Tamboran Resources plunged 7.7 per cent to 18c, while uranium miner Paladin Energy rose 4.3 per cent to 73c.
The Australian dollar fell against its US counterpart, buying 66.12 US cents, down from 66.42 at Wednesday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index finished Thursday down 1.6 points, or 0.02 per cent, at 7,194.9.
* The broader All Ordinaries rose 5.5 points, or 0.07 per cent, to 7,389.6.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 66.12 US cents, from 66.42 US cents at Wednesday’s ASX close
* 95.58 Japanese yen, from 95.58 Japanese yen
* 60.70 Euro cents, from 60.68 Euro cents
* 52.39 British pence, from 52.17 pence
* 108.81 NZ cents, from 108.79 NZ cents.
