Staff writers
Updated ,first published
Australia’s share market had a strong session on Wednesday as the latest national inflation data showed prices were not rising as quickly as the Central Bank had feared, sharply reducing the likelihood of an interest rate hike at the bank’s August meeting.
The S&P/ASX 200 ended 90.80 points, or 1 percent higher, at 9038.60, up 1.5 percent shortly after the release of data from the Australian Bureau of Statistics that showed annual inflation slowed to 3.8 percent in June. The bank was expecting to reach 4.8 percent.
The core measure of inflation – which takes the biggest price rises and falls – was lower at 3.6 per cent, below the 3.7 per cent forecast by economists and the 3.8 per cent expected by the RBA. The central bank raised rates at its first three meetings of the year to try to quell inflationary pressures that resurfaced before the US-Iran war sent shockwaves through oil prices.
Traders sharply cut bets on another rate hike this year to 50 percent, from more than 90 percent before the data was released. The Australian dollar fell 0.3 percent to US69.54¢.
The data was “softer than we expected, and it was good to see some fire service categories shrinking in June”, said AMP economist My Bui. “It’s still up, so we still think it’s likely to go up one more time this year.”
CreditorWatch chief economist Ivan Colhoun said the data “reduces immediate pressure on the RBA to act”, although he still expects moderate tightening later in the year.
Consumer and technology stocks – both cyclical sectors that would benefit from the end to higher interest rates – rose sharply after the release of the CPI data. Bunnings and Officeworks owner Wesfarmers rose 1.6 per cent, electronics retailer JB Hi-Fi jumped 4.7 per cent and Harvey Norman gained 4.1 per cent. Supermarket chains Woolworths and Coles added 1.9 percent and 2.5 percent, respectively, and Wine Estates Fund gained 4.1 percent.
Software developers also got excited, pulling the tech sector higher. WiseTech Global gained 2.3 percent, while Xero rose 4.1 percent and Technology One rose 3.4 percent. Family tracking app Life 360 jumped 3.7 percent. AI data center operator NextDC, however, fell 1.3 percent.
Australia’s biggest pharma stock, CSL, rose 7.2 percent after the biotech giant said that following talks with US and European regulators it would begin clinical trials to complete approval of a new technology that would allow it to produce high yields of immunoglobulins from plasma. Other health stocks also advanced, with apnea device maker up 3.6 percent and Chemist Warehouse owner Sigma gaining 2.8 percent.
Shares in Rio Tinto rose 3.7 percent after the mining heavyweight said first-half profit rose as strong commodity prices outweighed the effects of China’s economic slowdown, US tariff campaigns and conflict in the Middle East. The world’s second-largest miner reported an underlying profit of US$6.85 billion ($9.9 billion) for the half, 43 percent above the first half of last year, beating analysts’ estimates of US$6.78 billion. Shares in its biggest rival BHP added 1.4 percent, while Fortescue rose 2 percent.
Prices of iron ore – Rio’s main earner – remained stable over the past six months, despite strong demand from major buyer China. The company has yet to finalize talks with state-backed buyer China Mineral Resources Group on forward supply contracts.
Rio continues to push its copper growth strategy, a key metal for the energy transition, and a crossroads at its Oyu Tolgoi mine in Mongolia. Copper prices have risen about 10 percent this year, fueled by supply disruptions and increased demand from data centers.
Energy stocks were mixed, with oil and gas major Woodside rising 1.4 percent and Santos rising as oil prices rebounded after a three-day slide.
Brent crude rose nearly 4 percent to above $US87 a barrel, paring some 16 percent losses in the past three sessions, which was its biggest decline since 2020. The U.S. military said it had intercepted a “surprise test” by Iran against U.S. troops stationed in the Middle East. Meanwhile, the US military and Saudi Arabia also struck “terrorists linked to Iran” in Iraq after being ordered by the IRGC to target US forces and Saudi energy infrastructure, US Central Command said.
Much of Wall Street rose overnight, even as stocks of computer chip makers continued to decline around the world. The S&P 500 added 0.2 percent, but that modest move masked the larger changes below the surface. The Dow Jones Industrial Average jumped 537 points, or 1 percent, while the Nasdaq composite fell 0.2 percent after briefly falling 9.3 percent below its record set last month.
On Wall Street, Apple became the second company ever to reach a market valuation of $US5 trillion.
Shares of the iPhone maker rose as much as 1.8 percent to $342.89 earlier in the session, pushing the company’s market capitalization above $US5 trillion for the first time before retreating below the mark as shares fell before closing at $340.80. Nvidia closed at a record $US5.7 trillion on May 14, but has lost about $US1 trillion in inventory. Apple is now the largest company in the S&P 500 Index.
with AP, Bloomberg
The Market Recap is a summary of the day’s trading. Let’s find each otherekday afternoon.
