The laggards

Falling commodity prices weighed on mining and energy stocks. Index heavyweights BHP, Fortescue and Rio Tinto all retreated, falling 0.9 per cent, 0.8 per cent and 1.5 per cent, respectively.

Iron ore was down 2.1 per cent, Brent crude oil fell 1.1 per cent, and the spot gold price slipped 1 per cent.

Eight of the worst performing large-caps were energy and mining stocks, with Alumina (down 4.5 per cent) leading the pack.

Oil and gas giants Woodside (down 1 per cent) and Santos (down 0.1 per cent) lost ground. Yancoal declined 2.3 per cent and Whitehaven Coal slumped 3.7 per cent.

Shares of online accounting software provider Xero declined 4.4 per cent after the company priced $US925 million ($1.4 billion) in convertible notes. It weighed down the information technology sector, which finished 0.6 per cent lower.

Medibank shares fell 0.8 per cent after Australia’s privacy watchdog, the Office of the Australian Information Commissioner, sued the health insurance giant following its October 2022 data breach, alleging the company breached the nation’s privacy laws and exposed its customers to a risk of identity theft, extortion and financial crime.

The lowdown

Australia’s economy grew by just 0.1 per cent in the first three months of the year, taking annual economic growth to 1.1 per cent – the worst rate in more than 20 years, outside the COVID-19 pandemic, data released by the Australian Bureau of Statistics showed.

For a fifth consecutive quarter, Australia experienced a per-capital recession, signalling that migration remains the primary driver of growth.

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The slowdown will likely increase pressure on the Reserve Bank to begin an interest-rate easing cycle after it held rates unchanged at 4.35 per cent at its past four meetings.

“What is abundantly clear is that individual households, particularly those with a mortgage, are feeling the brunt of higher rates and cost-of-living pressures,” said Alex Joiner, chief economist at money manager IFM Investors. “Nonetheless, while inflation is uncomfortably high, the RBA will judge it necessary to keep economic growth weak.”

Capital senior financial market analyst Kyle Rodda said the data “adds weight to the argument that no further rate hikes are required from the RBA” .

Overnight on Wall Street, US stock indexes ended higher after a US Labor Department report showed job openings were down to 8.01 million in April – the lowest since 2021.

The data was the latest in a string of reports showing a slowdown in the US economy, leading markets to expect an earlier start to interest-rate cuts by the Federal Reserve.

The S&P 500 Index edged up 0.2 per cent to 5291.34. The Dow Jones Industrial Average rose 0.4 per cent and the Nasdaq Composite Index also added 0.2 per cent.

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RBA governor Michelle Bullock said at Senate estimates on Wednesday that she understood high interest rates hurt some households more than others, but emphasised that getting inflation down was the most important thing the central bank could do for the economy and all households. “The best thing I can do for everyone, including all the young people who have been hurt by this, is to get inflation down,” Bullock said.

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