* Mining, energy stocks weigh as commodity prices fall
* Australian Q4 base inflation under control, RBA looks accommodating
* Focus shifts to the US Fed meeting scheduled for later (Updates closed)
Jan 27 (Reuters) – Australian stocks closed lower on Wednesday, dragged lower by losses in the resource sector, while inflation underpinning record lows in the last quarter signals a possible retention of accommodative policy stance by the country’s central bank.
The S & P / ASX 200 closed 0.7% lower at 6,780.6, retreating from an 11-month high on Monday. The market is closed on Tuesday for a local holiday.
Data showed underlying inflation in Australia held at 1.2% in the December quarter, which analysts considered the green light for the Reserve Bank of Australia (RBA) to keep policy very easy.
“Underlying inflation is still far off target and to finally get there, the unemployment rate will have to be much lower and wage growth much higher,” wrote analysts at ANZ, adding that the figures suggest the RBA will continue its very accommodating policy stance.
“As such, we are looking for the RBA to extend its quantitative easing program with an announcement that may be made as early as next week when the Council meets.”
The US Federal Reserve’s policy meeting expected to end at a later date will be closely watched by investors, with analysts expecting the Fed to stick to a dovish tone to help speed the economic recovery.
Miners slumped 3.4% after China’s iron ore prices fell.
Fortescue Metals slumped 6.4% to see its worst session in more than four months, while global miners Rio Tinto and BHP posted significant losses.
Gold stocks also took a hit on falling gold bullion prices, with Newcrest Mining losing 1%.
Energy stocks closed lower. Woodside Petroleum Ltd and Santos Ltd fell 2.9% and 4.3%, respectively.
New Zealand’s benchmark S & P / NZX 50 index closed 0.4% higher to settle at 13.374. A2 Milk is the top winner in the index. (Reporting by Harish Sridharan in Bengaluru; editing by Uttaresh.V)
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