ASX edges lower, oil rally fans inflation fears

The news: The Australian sharemarket closed almost flat on Thursday, with the benchmark ASX 200 losing 0.08% to finish at 7,024.80. The All Ordinaries fell 0.1%. Benchmarks in New Zealand, Japan and Hong Kong all lost more than 1% after oil reached a new high for 2023, with Brent Crude piercing USD97 per barrel overnight and stoking inflation fears. The Aussie dollar is trading roughly flat compared to the same time yesterday, buying 63.7 US cents after falling as low as 63.3 US cents overnight.

The numbers: Oil's rally helped lift Australian energy stocks by 2.3%, with solid gains for Woodside (+2.8%), Santos (+3.3%) and Whitehaven Coal (+5.8%). All other sectors finished in the red with moderate losses in consumer discretionary stocks (-1.2%), utilities (-0.8%) and communication services (-0.7%). Retail turnover increased a modest 0.2% in August according to ABS data, while job vacancies fell for the fifth straight quarter but remained well-above pre-pandemic numbers.

The context: The Reserve Bank will release monthly private sector credit data tomorrow at 11:30. Quarterly US GDP and unemployment data will drop at 10:30pm AEST tonight, and investors will also be watching a speech from Federal Reserve chair Jerome Powell at 6am AEST tomorrow. Markets in China will be closed for a bank holiday on Friday.