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Australian shares trim gains as inflation remains elevated

By Reuters News

Oct 28 (Reuters) - Australian shares erased most of the early gains on Wednesday after stronger-than-expected September-quarter inflation data fuelled bets of a fifth rate hike this year, while New Zealand's central bank surprised markets by holding rates steady.

The S&P/ASX 200 index .AXJO rose 0.4% to 8,883.20 by 0106 GMT. The benchmark rose 1% before the data was released.

The Reserve Bank of New Zealand kept the cash rate steady at 2.75% in a surprise decision, but said the committee agreed that tighter monetary policy is likely to be required, depending on the economic outlook.

New Zealand's benchmark S&P/NZX 50 index .NZ50 recouped losses, inching up 0.1% at 13,693.99.

In Australia, data showed consumer price inflation surged in July-September, with the annual pace of the key trimmed mean measure of core inflation at 3.6%, well above the central bank's target range of 2% to 3%.

The Reserve Bank of Australia Governor Michele Bullock said that policymakers will weigh next week whether four rate hikes this year are sufficient to combat inflation, while warning domestic price pressures remain elevated.

Swaps now imply an 86% chance the RBA will tighten policy by a quarter point to 4.85%, up from 69% before the data. 0#AUDIRPR

Heavyweight miners .AXMM advanced 1.6% as copper prices rose after demand strengthened in top consumer China. Rio Tinto RIO.AX and BHP BHP.AX edged 0.4% and 0.7% higher. MET/L

Rate-sensitive financials .AXFJ gained 0.3%, with Commonwealth Bank of Australia CBA.AX and Macquarie Group MQG.AX rising 0.4% and 0.2%, respectively.

Technology stocks .AXIJ rose 2.5%, tracking their Wall Street peers on an AI-fuelled tech rally. .N

Woolworths WOW.AX rose as much as 1.4% after Australia’s largest supermarket chain said first-quarter sales grew as budget-conscious shoppers looked for discounts.

Capping gains, energy stocks .AXEJ slid 1.2% on falling oil prices. Both Woodside Energy WDS.AX and Santos STO.AX dropped more than 1.4%. O/R

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