Commonwealth Bank of Australia (ASX: CBA) is one of the stocks leading the Australian sharemarket lower today as investors weigh in on the most recent consumer price index (CPI) data.
The market was hoping the data would reveal weak inflation figures which would pave the way for further interest rate cuts from the Reserve Bank of Australia, with one to come as soon as 5 May when it next meets.
The figures showed a rise of 0.2 per cent in the three months to March, giving an annual rate of just 1.3 per cent which is well below the Reserve Bank of Australia's target inflation levels of 2-3 per cent per annum. At the same time however, the weighted median, which provides a measure of the underlying inflation trend, rose 0.6 per cent for the quarter for an annual rate of 2.4 per cent – which is much closer to the RBA's target range.
While this was perhaps slightly higher than what investors were expecting, The Australian said that the market's pricing of the chance of an interest rate cut in May had fallen from 64 per cent to 52 per cent.
Commonwealth Bank's shares, together with those of its Big Four rivals, are hovering near record or multi-year highs with investors hoping to take advantage of their fully franked dividends. With the market now questioning whether or not rates will actually be cut further; investors appear to be selling out before the rest of the market decides to do the same.
While its shares have fallen 0.9% for the day, its rivals National Australia Bank Ltd. (ASX: NAB), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ) have also fallen between 0.8% and 1.4%.
