Global Markets | Australian shares end lower; softer-than-expected core inflation limits slide

Australian shares closed at a near four-week low on Wednesday but pared early losses after a softer-than-expected measure of core inflation cooled expectations of a May rate ‌hike, although ⁠underlying inflationary ⁠trends remain a concern.

The S&P/ASX 200 index ended 0.3% lower at 8,687.00, their lowest close ​since April 2. The benchmark has lost nearly 3% over the past seven consecutive ​sessions, marking its longest losing streak since mid-June 2022. Australia's first inflation print since the start of the U.S.-Iran war in late February showed a ​sharp jump in the first-quarter consumer price index, ⁠driven by ‌surging energy costs.

However, the key trimmed-mean measure of core ​inflation, which excludes ​the most volatile items such as fuel, undershot forecasts.


Immediately after ⁠the data, traders cut the odds of a ​May 5 rate hike to around 71% from 86%, while ​the ASX200 benchmark shaved earlier losses.

Kai Chen, director at MPC Markets, termed it a "relief versus feared worse" reaction.

"After seven straight sessions of losses, the ASX is technically primed for a snap-back," Chen said, but warned that the underlying inflation trend hadn't changed as "real inflationary impulse from the Iran ‌conflict won't be fully visible until Q2".

"Without a genuine resolution, oil stays elevated, services inflation stays sticky, and the RBA ​stays hawkish ​into H2."

On the ⁠bourse, miners trimmed early losses, closing 0.4% lower.

Financials ended 0.6% lower, while real estate stocks and consumer discretionary stocks rose around 0.3%

Chen warned that support for rate-sensitive sectors remains thin as household incomes stay under pressure, adding that the upcoming RBA decision is "what matters". Energy stocks extended gains to add 1.3%. Woodside Energy added as much as 2.4% after reporting first-quarter revenue that beat estimates.

In New Zealand, the benchmark S&P/NZX 50 index ended little changed at 12,770.30.