Australian shares narrowly missed resetting a record high on Wednesday after inflation cooled faster than expected, fuelling hopes of a rate cut from the Reserve Bank of Australia next month.

The S&P/ASX 200 index rose 0.6 per cent, or 47.9 points, to 8447 at the market close. The All Ordinaries rose 0.7 per cent.

Several banks – among them Westpac, Citi and RBC – brought forward predictions for the timing of the RBA’s first interest rate cut this cycle to February. That sent the Australian dollar lower to US62.45¢.

The shift came after the latest consumer price index data from the Australian Bureau of Statistics showed both the core and headline inflation in the December quarter cooled.

“The downside surprise in today’s figures means the RBA can be more comfortable that inflation is headed into the target band sustainably,” AMP deputy chief economist Diana Mousina said. “While there have been a lot of arguments that Australia’s inflation experience is different to our global counterparts, most recent data suggests this is no longer the case.”

Some economists were unconvinced and maintained later forecasts for easing.

Shares extended gains following the CPI news, with the ASX 200 approaching a 1 per cent rise in afternoon trading. The rate-sensitive utilities sector, which closed 2 per cent higher, led the rally. Real estate investment trust Charter Hall advanced 1.5 per cent to $15.40.

Mercury NZ rallied 7.7 per cent to $5.60 and Origin Energy jumped 1.6 per cent to $11.15.

Meanwhile, ASX technology stocks pushed higher after the sector in the US rebounded from fears that DeepSeek could derail American artificial intelligence supremacy. WiseTech gained 2.6 per cent to $122.78 and Xero 2.5 per cent to $180.

Mining heavyweights BHP and Rio Tinto weighed on the index, falling 0.9 per cent to $39.13 and 1.3 per cent to $116.23 respectively.

In Singapore, the benchmark iron ore futures contract rose 0.7 per cent to $US104.30 a tonne. Brent crude pared back earlier gains, falling 0.2 per cent to $US77.32 a barrel.

Stocks in focus

Star Entertainment posted the largest gain on the ASX 200 on Wednesday, rallying 13 per cent to 13¢. The embattled casino operator is selling its Star Sydney events venue for $60 million to Foundation Theatres and Wall Street’s Cerberus is talking to its debt investors, according to The Australian Financial Review’s Street Talk column.

Adamantem Capital pulled out of a bid for Close the Loop, sending the latter’s shares plummeting 28.6 per cent to 13¢.

Boss Energy remained on track to meet production guidance this financial year, achieving a 96 per cent increase in ion exchange plant production. The shares were 5.6 per cent higher at $3.

Perseus Mining climbed 3.7 per cent to $2.83, reporting a rise in gold production in the December quarter although a big waste-stripping program at the Ivory Coast Yaoure operations led to a jump in costs.

Pilbara Minerals shares gained 3.5 per cent to $2.36 as the miner argued that lithium prices have bottomed – even as quarterly output fell.

Premier Investments shares fell 21 per cent to $22.67, reflecting the formalisation of its apparel brands merger with Myer.