Australian shares rebound from 3-week low on mining boost; banks drag

Australian shares rebounded on Wednesday from a three-week low hit in the previous session, lifted by iron ore and gold miners, though gains were ‌capped by financial stocks ‌as a sticky core inflation reading kept the possibility of a rate hike alive.

The S&P/ASX 200 edged ‌0.2% higher to finish at 8,695.60. The benchmark slipped 0.5% on Tuesday to mark its weakest session in three weeks.

Local data showed earlier in the day that consumer prices rose by less than forecast in November. A closely watched core gauge, however, remained above the central bank's 2%-3% target range, indicating persistent inflationary pressures and leaving scope for a potential interest rate hike.


The ‌focus now ‍turns to the quarterly measure, expected later this month, which ‍will have a bearing on the Reserve Bank of Australia's ‌first monetary policy meeting of the year in mid-February.

Swaps indicate a 35% chance of a quarter-point rate hike next month, higher than around 30% chance before the inflation data.

"The earlier market pricing of further cuts in 2026 is being revised out of the curve, and odds of a hold or even modest hikes now outweigh fresh cuts in the near term," said ‍Greg Boland, market strategy consultant at Moomoo Australia.

Financials fell 1% to a four-week low. Three of the "Big Four" banks dropped between ‍1.5% and ⁠2%, while top lender CBA ⁠slid 1.7% to its lowest point in nearly four weeks.

Conversely, miners rose 1.2% to a record high on stronger commodity prices.

Shares of BHP added 1% to close at a near two-year high, while Rio Tinto rose 1.6% to hit a record for the third consecutive session.

Lynas Rare Earths, the world's largest rare-earths producer outside China, surged 14.5% after China banned exports of certain rare-earths elements to Japan.

New Zealand's S&P/NZX 50 climbed 0.4% to a record closing high of 13,715.02.