ASX breaks winning streak as investors await RBA rate cut
Domino's pizza shares dropped 2.6 per cent after the surprise resignation of its chief executive after nine months in the job. Less than one year ago, shares were valued at $39.35 per share – they are now $24.55.
Miners BHP (down 2.4 per cent), Fortescue (down 4.9 per cent) and Rio Tinto (down 1.3 per cent) suffered losses after a fall in iron ore prices.
Mineral Resources (down 8.8 per cent) slumped as it unveiled its new chair, Malcolm Bundey, who will take over from James McClements on July 1.
The price of oil fell, which weighed down the energy sector, with Woodside (down 1.5 per cent) Santos (down 1.7 per cent) and Yancoal (2 per cent) among worst performers.
Commonwealth Bank (up 1 per cent) bucked the trend in the banking sector, closing at $171.36, while ANZ (down 1.7 per cent), NAB (down 0.5 per cent) and Macquarie Group (down 1.6 per cent) all lost ground.
The lowdown
David Bassanese, chief economist at BetaShares ETFs, said it was hard to pinpoint what drove the changes in the market but speculated there could be some 'nagging doubt' that the RBA would cut rates tomorrow.
'It [a rate cute] is almost a virtual certainty, priced into the market,' said Bassanese. 'Maybe just some concern that there's a nagging doubt that the RBA may not cut rates tomorrow.'
Big-four banks are predicting a rate cut, which the RBA will announce on Tuesday afternoon. It is expected to lower the cash rate by 0.25 percentage points.
HSBC chief economist Paul Bloxham said it was obvious a rate cut was needed, but the cautious approach of the RBA made it hard to predict.
'The RBA's patient approach to dealing with the post-pandemic inflation surge has paid off,' said Bloxham. 'Core inflation has fallen back into the RBA's target band without a recession or large retrenchment of the jobs market.'
If not for the concern regarding a rate cut, the day's losses could be the result of some profit-taking after a stretch of positive closes on the ASX, Bassanese said.
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Bassanese also said credit ratings agency Moody's decision to downgrade the United States' AAA credit rating – combined with deepening concern that growing debt will damage America's standing as the choice destination for global capital – may have affected the slide.
The Moody's downgrade caused US Treasury yields to move higher, increased appetite for haven assets and boosted gold after its biggest weekly decline in six months.
The one-notch cut from Moody's comes more than a year after Moody's changed its outlook on the US rating to negative. The credit assessor now has a stable outlook.
'While we recognise the US' significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics,' Moody's wrote in a statement.
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