Australian sharesclosed at a near four-week low on Wednesday but pared early losses after a softer-than-expected measure ofcore inflationcooled expectations of a May rate hike, although underlying inflationary trends remain a concern.
The S&P/ASX 200 index ended 0.3% lower at 8,687.00, their lowest close since April 2. The benchmark has lost nearly 3% over the past seven consecutive sessions, marking its longest losing streak since mid-June 2022. Australia’s first inflation print since the start of the U.S.-Iran war in late February showed a sharp jump in the first-quarter consumer price index, driven by surging energy costs.
However, the key trimmed-mean measure of core inflation, which excludes the most volatile items such as fuel, undershot forecasts.
Immediately after the data, traders cut the odds of a May 5 rate hike to around 71% from 86%, while the ASX200 benchmark shaved earlier losses.
Kai Chen, director at MPC Markets, termed it a “relief versus feared worse” reaction.
“After seven straight sessions of losses, the ASX is technically primed for a snap-back,” Chen said, but warned that the underlying inflation trend hadn’t changed as “real inflationary impulse from the Iran conflict won’t be fully visible until Q2”.
“Without a genuine resolution, oil stays elevated, services inflation stays sticky, and the RBA stays hawkish into H2.”
On the bourse, miners trimmed early losses, closing 0.4% lower.
Financials ended 0.6% lower, while real estate stocks and consumer discretionary stocks rose around 0.3%
Chen warned that support for rate-sensitive sectors remains thin as household incomes stay under pressure, adding that the upcoming RBA decision is “what matters”. Energy stocks extended gains to add 1.3%. Woodside Energy added as much as 2.4% after reporting first-quarter revenue that beat estimates.
In New Zealand, the benchmark S&P/NZX 50 index ended little changed at 12,770.30.
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