Why did the Dusk share price flame out 16% in June?

Dusk shares encountered a difficult month of trading brought on by external market factors.

| More on:
woman sitting glumly in the dark with candles

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Dusk shares sank 16% last month following unfavourable market conditions brought on by strong inflationary movements
  • In response, the Reserve Bank of Australia increased the official cash rate which ultimately puts downward pressure on consumer spending habits
  • The broader S&P/ASX 200 Consumer Discretionary (ASX: XDJ) sector also declined 7% in June

The Dusk Group Ltd (ASX: DSK) share price continued to dim throughout the month of June.

At market close on 31 May, the specialty retailer’s shares last traded at $1.99 a pop. Fast forward to the end of June, its shares closed at $1.67, representing a decline of 16% for the month.

After falling into bargain territory, Dusk shares are staging a strong rebound today to zip 6.99% higher, back to $1.99 apiece.

What blew the wind out of Dusk shares?

Investors dragged down the Dusk share price amid negative sentiment across the ASX in June.

After inflation levels spiked to 5.1% during the March quarter, the Reserve Bank of Australia (RBA) decided to intervene.

The central bank tightened up its monetary policy by raising interest rates in a bid to cool down the rampant inflation.

The official cash rate rose by 0.5% last month and another 0.5% yesterday – which currently puts it at 1.35%.

Around the country, prices on consumer goods were noted to have surged at the fastest annual pace over the last 20 years.

What this means is that consumers are less likely to spend on discretionary items while interest rates are picking up. The cost of debt, such as credit cards as well as personal loans, requires extra payments which, in turn, affects consumer spending habits.

Nonetheless, a gloomy economic outlook is also weighing down the S&P/ASX 200 Consumer Discretionary (ASX: XDJ) sector. The index fell 7% over the course of June.

While Dusk hasn’t made any announcements recently, investors will be keeping a close eye on the upcoming monthly household spending report. This provides a clearer indication of household spending as well as the health of the country’s economic growth.

Dusk share price snapshot

It has been a disappointing 12 months for the Dusk share price, falling by almost 50% for the period.

When looking year to date, the company’s shares are down around 38%.

Based on today’s price, Dusk commands a market capitalisation of roughly $115.82 million.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dusk Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

Woman thinking in a supermarket.
Consumer Staples & Discretionary Shares

Can Coles shares deliver 13% growth AND tasty dividends this year?

We see what the experts are saying about the grocer's outlook.

Read more »

falling milk asx share price represented by frowning woman tasting sour milk
Consumer Staples & Discretionary Shares

The A2 Milk share price has had a tough week. Could this other ASX dairy company cash in?

This week delivered disappointing news for A2 Milk shareholders...

Read more »

two children squat down in the dirt with gardening tools and a watering can wearing denim overalls and smiling very sweetly.
Consumer Staples & Discretionary Shares

‘Back to a growth mindset’: Expert names ASX share ready to take off

In just two years this business overcame devastation and is now ready to grow again, reckons this fund manager.

Read more »

a happy woman wearing a white towel around her chest and another around her head laughs heartily while holding two slices of cucumber over her eyes as part of a beauty regime.
Consumer Staples & Discretionary Shares

Adore Beauty share price volatile following CEO resignation

Adore Beauty's CEO has called it time.

Read more »

A man looks sadly away from his computer screen as he holds a slice of pizza in his hand with an open pizza box in front of him on his desk.
Consumer Staples & Discretionary Shares

Is it a problem for shareholders that Italians don’t like Domino’s Pizza?

The pizza chain appears to have fizzled out in Italy.

Read more »

A group of people clink wine glasses in an outdoor, late afternoon setting to celebrate the rising Treasury Wine share price
Consumer Staples & Discretionary Shares

Treasury Wine share price up amid key China trademark win

Pop open the champagne bottle: the company just won a Chinese court case.

Read more »

a small girl sits with her hand holding up the side of her face as she looks down in a downcast manner as she drinks a glass of milk through a straw.
Consumer Staples & Discretionary Shares

Why is the A2 Milk share price spilling 8% today?

It's been a tough day for A2 Milk shareholders.

Read more »

A happy farmers sifts his fingers through grain, indicating a good crop and higher prices
Consumer Staples & Discretionary Shares

Why is the GrainCorp share price up 7% today?

The agribusiness has delivered good news to the market on Wednesday.

Read more »