Australia: Shares rise after Q2 inflation data allays sharp rate hike fears

AUSTRALIAN shares closed higher on Wednesday (Jul 27) as banking stocks rose on reduced fears about a sharp economic slowdown, after lower-than-expected inflation data raised hopes of a less hawkish central bank policy.

The S&P/ASX 200 index ended 0.2 per cent higher at 6,823.20. The benchmark rose 0.3 per cent on Tuesday.

“Lower than expected Australian CPI print today places less pressure on the RBA (Reserve Bank of Australia) to pursue aggressive monetary tightening to contain inflation,” said Cameron McCormack, a portfolio manager at VanEck Australia.

Data from the Australian Bureau of Statistics showed that consumer price index (CPI) jumped 1.8 per cent last quarter, just short of market estimates of 1.9 per cent. The annual rate rose to 6.1 per cent from 5.1 per cent, the highest since 2001 and more than twice the pace of wage growth.

Investors also awaited a US Federal Reserve meeting later in the day, where the central bank is expected to raise rates.

On the domestic bourse, financial stocks rose 1.1 per cent, with the so-called “Big Four” banks gaining between 0.4 per cent and 2.2 per cent.

Gold stocks rose 1.3 per cent after bullion inched up overnight.

Miners fell 1.3 per cent despite a rally in iron ore prices. McCormack said that investors might be concerned about an imminent global recession and China’s Covid-zero stance.

Miner Rio Tinto reported a 29 per cent drop in first-half profit after market close on Wednesday, hurt by weaker iron ore prices due to cooling demand from top consumer China, higher costs and labour shortages. Its shares ended 2 per cent lower in the session.

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Australia: Shares slip ahead of inflation data, Fed decision

Energy stocks also followed suit to end 0.3 per cent lower.

New Zealand’s benchmark S&P/NZX 50 index fell 0.3 per cent to finish the session at 11,135.03. REUTERS