Global Markets | Australian shares rally on softer inflation, Mideast ceasefire prospect

Australian shares closed nearly 2% higher on Wednesday after softer-than-expected inflation data lifted sentiment, while optimism around a potential Middle East ceasefire further supported gains.

The S&P/ASX 200 index ended 1.9% higher at 8,534.30, its strongest daily gain ‌since February ⁠9.

Data showed ⁠that consumer prices were unchanged in February, nudging the annual pace of inflation down to 3.7%, from 3.8% in the previous month.


While the February inflation reading offers only a momentary sigh of relief, a bigger test will come with the next inflation data, as energy costs have spiked since the conflict in Iran began, said Tim Waterer, chief market analyst at ⁠KCM Trade.

Markets ‌now imply a near 50% chance that the Reserve Bank of Australia will lift its 4.1% cash rate at its ⁠next meeting on May 5, and could take rates as high as 4.75% by year-end.

However, Waterer noted the "50% priced-in May hike could evaporate" if oil keeps sliding, as reports of the U.S. seeking a month-long ceasefire in its war on Iran, has raised expectations for a resumption of oil exports.

Oil prices fell around 4% on Wednesday.

Energy stocks closed 2.3% lower, with Woodside Energy and Santos sliding ‌3.2% and 2.3%, respectively.

Gold stocks advanced 8.2% after bullion rose more than 2%. Northern Star Resources and Evolution Mining ended 7% and 8.5% higher, respectively.

Miners climbed 4.6%. ⁠Rio Tinto gained 1.6% after Australia unveiled A$2 billion ($1.39 billion) over 10 years to support the miner's Boyne Smelters, the country's second-largest aluminium smelter, to stay open.

Financials ended up 1.3%, with three of the "Big Four" banks advancing between 0.6% and 1.7%, and National Australia Bank ending flat.

Technology, healthcare and real-estate stocks each ended over 1.4% higher.

New Zealand's benchmark S&P/NZX 50 index ended 1.8% higher at 12,929.30, snapping a four-day losing streak. ($1 = 1.4347 Australian dollars)