Australian share market flat despite looming Reserve Bank rate hike

Despite a surprise 1.2 per cent reacceleration of inflation in the September quarter, the Aussie share market closed flat.

A jump in mining stocks clawed back earlier losses on the Australian sharemarket on Wednesday after a hotter-than-expected inflation reading raised the odds of November rate hike which dragged the benchmark lower.

The S & P/ASX200 was flat, falling just 2.6 points to close at 6,854.3 points, while the All Ords 0.6 points to 7,046.2

The benchmark added 0.4 per cent before the release of the data at 11:30am before sinking 0.3 per cent after the fresh inflation print was released.

Money markets are now pricing in 65 per cent odds for a rate hike at the RBA’s Melbourne Cup Day meeting.

Household borrowers shouldn’t expect to be winners on Melbourne Cup Day. Picture: supplied

Interest rate sensitive real estate and consumer stocks were the worst performers on the benchmark, dropping 2 per cent and 1.4 per cent, respectively.

Meanwhile, material stocks were the best performers, rising 1.6 per cent. Iron ore miners were up with Rio Tinto adding 2.6 per cent to $116.51, Fortescue Metals Group gained 3 per cent to $22 and BHP rose 2.3 per cent.

Headline inflation was 1.2 per cent in the September quarter, up from 0.8 per cent in June, data released by the Australian Bureau of Statistics on Wednesday showed.

However, annual headline inflation fell to 5.4 per cent in September, down from 6 per cent in June.

The data was stronger than economists’ expectations of a lift in the quarterly consumer price index of 1.1 per cent and an annual increase of 5.3 per cent.

Iron ore miners rallied after a jump in commodity futures on the Singapore exchange yesterday. Picture: supplied.

Gemma Dale, director of investor behaviour at NAB Trade, said the fresh CPI print came as a “nasty shock” to markets, and firmed the chance of a November hike.

“After Michelle Bullock’ comments, which made it really clear that they have no intention of ignoring upward pressure from inflation, and they will do what it takes – that made the market nervous,” Ms Dale said.

While the share market recovered from losses following the inflation reading, Ms Dale said markets would likely remain volatile in coming days.

“It's possible some anxiety will creep back in through the week now” she said.

In company news, Brad Banducci, chief executive of Woolworths, announced a 5.3 per cent rise in Q1 sales for the supermarket giant when compared with the year earlier.

Food inflation costs affecting shelf prices eased in the September quarter. Shares dipped 2.4 per cent to $35.49

Woolworths boss Brad Banducci announced sales at the retail giant had jumped to $17.2bn in the September quarter. Picture: Supplied

Magellan shares dropped 3.5 per to $6.30 following the announcement that chief executive David George was exiting the money manager.

Board director Andrew Formica will act as executive chair until he finds George’s replacement who will be Magellan’s fourth CEO since December 2021.

Petrol and diesel refiner and retailer Ampol announced a rise in its refinery margins, which jumped to $US19.69 a barrel, up from $US15.46 a year ago. Shares added 4.1 per cent to $33.05.

Online electronics retailer Kogan announced its sales figures had returned to growth in the first quarter of financial year 2023-24. Shares soared 9.3 per cent to $4.89.

Originally published as Australian share market flat despite looming Reserve Bank rate hike