Australian shares end flat as hot CPI data lifts odds of rate hike next month

By Reuters News

By Aamir Khalid

- The Australian share benchmark ended little changed on Wednesday, after surrendering earlier gains following hot inflation data that strengthened expectations of a November rate hike.

Annual CPI inflation accelerated in the third quarter on higher fuel costs, keeping it above the Reserve Bank of Australia's 2%–3% target range, and raised the chance of a November 3 rate hike to 90% from 69%. 0#AUDIRPR

The benchmark S&P/ASX 200 index .AXJO ended flat at 8,847.30 points, after gaining as much as 1% earlier.

"For equities, a higher-for-longer rate case increases borrowing costs, pressures corporate earnings and growth, and makes valuations harder to justify, particularly for growth stocks," said Grady Wulff, a senior market analyst at Bell Direct.

"The market is coming to terms with the possibility that the RBA isn't finished hiking yet, hence the pullback post CPI announcement."

Global central banks are grappling with a high inflation outlook as energy prices rise along with AI companies' massive expansion and higher government debt.

RBA Governor Michele Bullock said policymakers will debate next week if the four rate hikes this year so far were sufficient to return inflation to target.

Heavyweight banks .AXFJ rose 0.2%, with three of the "Big Four" in the green, after earlier gaining 1%.

Rate-sensitive discretionary .AXDJ and real estate .AXRE stocks slipped 1.5% and 0.5% respectively.

In other sections of the market, miners .AXMM rose 1.2%, lifted by higher copper prices. Rio Tinto RIO.AX gained 0.2%. MET/L

Tech stocks .AXIJ surged 2.4%, their best session in nearly two weeks, tracking overnight gains on Wall Street. .N

Energy stocks .AXEJ fell 2.5%, their worst session in nearly a month, with Woodside Energy WDS.AX and Santos STO.AX down 3.2% and 1.7%, respectively.

The New Zealand benchmark S&P/NZX 50 index .NZ50 ended slightly higher at 13,691.33 points. The country's central bank unexpectedly held its cash rate, but acknowledged that further tightening may be needed to tackle rising energy prices.

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