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ASX closes 0.28% higher: Retailers struggle as RBA raises rates

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2023-11-09

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Retailers in Australia may feel that the Reserve Bank of Australia (RBA) is not on their side, given the recent decision by the RBA to raise the official cash rate for the first time in four months. This rate hike, amounting to 0.25 percentage points, brought the rate to 4.35%, marking the highest level in over a decade, and it couldn't have come at a more inconvenient time for retailers, occurring just 16 days before the highly anticipated Black Friday/Cyber Monday promotions.

The timing of the rate increase has left retailers in a challenging position, as they were beginning to see an upswing in consumer spending, which had boosted their hopes for a successful holiday shopping season. These rate hikes can potentially dampen consumer sentiment and spending, affecting the retail sector's ability to leverage the discounting and promotions associated with Black Friday and Cyber Monday to drive sales and move inventory. As retailers strive to navigate these economic headwinds, they face increased pressure to adapt their strategies and offerings to accommodate changing consumer behavior in an environment of rising interest rates.

At the closing bell, the S&P/ASX 200 was 0.28 per cent higher at 7,014.90.

Futures

The Dow Jones futures are pointing to a rise of 5 points.

The S&P 500 futures are pointing to a fall of 2.75 points.

The Nasdaq futures are pointing to a fall of 12.25 points.

The SPI futures are up 23 points.

Best and worst performers

The best-performing sector was Health Care, up 0.98 per cent. The worst-performing sector was Information Technology, down 4.83 per cent.

The best-performing large cap was South32 (ASX:S32), closing 2.89 per cent higher at $3.20. It was followed by shares in Orica (ASX:ORI) and CAR Group (ASX:CAR).

The worst-performing large cap was Xero (ASX:XRO), closing 12.42 per cent lower at $100.47. It was followed by shares in Newmont Corporation (ASX:NEM) and ResMed (ASX:RMD).

Asian markets

Japan's Nikkei has gained 1.54 per cent.

Hong Kong's Hang Seng has lost 0.18 per cent.

China's Shanghai Composite has gained 0.08 per cent.

Commodities and the dollar

Gold is trading at US$1,953.70 an ounce.

Iron ore is 1.3 per cent higher at US$127.70 a tonne.

Iron ore futures are pointing to a 1.51 per cent rise.

Light crude is trading $0.10 higher at US$75.43 a barrel.

One Australian dollar is buying 64.11 US cents.

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