Miners, utilities drag ASX into the red

Packaging company Orora (down 4.5 per cent) also hovered around the bottom, along with Champion Iron (down 3.3 per cent).

Incitec Pivot was unchanged after announcing it had ceased negotiations with PT Pupuk Kalimantan Timur for the sale of its fertiliser business. The big miners all closed lower, led by BHP (down 1.3 per cent).

The lowdown

Moody’s Ratings vice president and senior credit officer Ian Chitterer said Incitec Pivot’s decision to withdraw from the sale of its fertiliser business would have no impact on its credit profile.

“Given that the potential purchaser PT Pupuk Kalimantan Timur is an Indonesian state-owned enterprise, approval from the Foreign Investment Review Board would have been uncertain if the sale had proceeded because of the importance of Incitec Pivot’s fertiliser supply in the Australian food chain,” he said.

“We therefore had not incorporated the potential divestment in Incitec Pivot’s ratings given the uncertainty.”

Meanwhile, economists on Wednesday said the buoyant Australian dollar still has room to rise.

“It’s undervalued; interest rate differentials look likely to shift in favour of Australia; sentiment towards the [Australian dollar] is negative; commodities still look to have entered a new super cycle; and Australia is a long way from the current account deficits of the past,” AMP chief economist Shane Oliver wrote in a note.

“There is a case for Australian-based investors to remain tilted a bit to hedged global investments, but while maintaining a still decent exposure to foreign currency.

The greatest downside risk to the Australian dollar? “If there is a recession or a new Trump trade war.”

Overnight, the S&P 500 and Nasdaq composite each rose 0.1 per cent, enough to bump up the indexes to all-time highs for the second time this week. The Dow Jones slipped 0.1 per cent after spending much of the day drifting between small gains and losses.

In his testimony before the Senate Banking Committee, US Fed boss Powell reiterated that inflation has eased notably in the past two years, though it remains above the central bank’s 2 per cent target. He also noted that there’s a risk in the Fed moving to cut interest rates too late or too little, warning either scenario could end up weakening the economy and job market.

Powell’s testimony offered little new guidance on the Fed’s plans for when it might lower interest rates. Traders are still betting there’s a 70 per cent chance that the central bank will cut its main interest rate as soon as September, according to data from CME Group.

In his testimony, Powell noted that “elevated inflation is not the only risk we face”. Cutting rates “too late or too little could unduly weaken economic activity and employment,” he said.

Powell is scheduled to testify on Wednesday (Washington time) before the House Financial Services Committee. His testimony comes ahead of the new inflation updates later this week.

Wall Street expects the latest government report on Thursday to show consumer prices eased to 3.1 per cent in June from 3.3 per cent in May. A report for inflation at the wholesale level, before costs are passed on to consumers, is expected on Friday.

Tweet of the day

Quote of the day

“There’s a real issue about how much of this material is confidential.”

That’s Justice Brigitte Markovic, who is presiding over the case before Australia’s Federal Court in which Fortescue has taken legal action against three former employees: Michael Masterman, Bart Kolodziejczyk and Bjorn Winther-Jensen.

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More staff members at News Corp’s Australian titles are being made redundant this week, as management finalises plans to make savings across the company’s mastheads.

Twenty editorial staff would lose their jobs, said people with direct knowledge of the plans, speaking on condition of anonymity. Ten of them would be taking voluntary redundancies.

With AP

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