Australia Stocks Stumble as Retail Sales Data Disappoints

Australian stocks ended on a weak note on Thursday as shares in the consumer sector stumbled due to tepid growth in retail sales for August.

The S&P/ASX 200 index closed 0.08% lower at A$7,024.80, with consumer discretionary stocks falling 1.18% to log the sharpest losses. Shares in IDP Education Ltd. were down 3.46% to A$20.95, while Aristocrat Leisure Ltd. dropped 1.86% to A$40.64, and Wesfarmers Ltd. shed 0.81% to A$52.65.

The slump also spread to the consumer staples sector, with heavyweight Woolworths Group Ltd. leading the slide with a 0.85% dip to end the session at A$37.27. Coles Group Ltd. also edged lower by 0.70% to A$15.60, while A2 Milk Company Ltd. lost 2.60% to A$4.50.

On the other hand, energy stocks showed optimism, rising 2.96%. Whitehaven Coal Ltd. headed the surge, gaining 6.06% to A$7.35, while shares in ResMed Inc. added 4.83% to A$24.10. Karoon Energy Ltd. also climbed 4.74% to A$2.65.

Australian Retail Sales Disappoint

Australian retail sales barely showed growth in August, indicating the negative economic impact of the quick interest rate hikes from the Reserve Bank of Australia (RBA).

Data from the Australian Bureau of Statistics (ABS) showed on Thursday that retail sales increased 0.2% month-on-month in August, below July’s reading of a 0.5% rise and forecasts for a 0.3% improvement.

The lower household spending aligns with weak consumer sentiment. It also supported the possibility that the RBA would keep the official cash rate steady at 4.10% at its meeting on Tuesday, with the central bank seeming to agree to continue its extended rate hike pause.

ABS retail statistics head Ben Dorber said spending was again driven by the 2023 FIFA Women’s World Cup.

Demand for fan gear bolstered while spending in restaurants, cafes, and takeout food outlets climbed during the event as a huge number of people showed up to the matches and live sites across the country.

Retail sales are crucial to interest rate decisions, considering consumption represents about 60% of the national gross domestic product (GDP). Retail activity down under have stayed at low levels over this year, advancing only a 1.5% compared to a 19.2% year-over-year surge posted in August 2022.