The Australian sharemarket closed lower on Wednesday, as a bout of risk-off sentiment swept the market before the release of key US inflation data.

The S&P /ASX 200 index closed 0.2 per cent, or 17.7 points, lower to trade at 8213.3. Nine of the index’s 11 sectors closed lower, with communications and technology stocks posting the largest losses.

The sharemarket swung to red in afternoon trading as investors braced for US consumer price index data on Thursday. US consumer prices are forecast to rise for the fifth consecutive month, up one percentage point to 0.4 per cent.

This, coupled with fears that policies introduced by President-elect Donald Trump could prove inflationary, has heightened uncertainty among investors around the path for interest rates, according to Sequoia Wealth’s Patrick Trindade.

“It’s starting to look like a risk-off market. And we are going into Trump’s inauguration in five days, so global uncertainty is settling in,” he said. “Funds are positioning themselves for the volatility that might come in the next couple of weeks.”

To prepare for volatility, Mr Trindade said investors were trimming positions in the sharemarket’s largest names.

“People are trimming the winners to have some cash in their pocket – just in case,” he said. “In times of uncertainty, people either concentrate their portfolios in defensive stocks, or in cash.”

Selling gained momentum for some of the index’s largest stocks on Wednesday afternoon. Industrial property developer GMG weighed on the index, falling 0.6 per cent to $36.54 even as other property stocks posted gains. Stockland lifted 1.2 per cent to $4.88 and Mirvac gained 1.3 per cent to $1.89.

Elsewhere in the index, Biotech CSL fell 1.2 per cent to $276.33, supply chain logistics stock Brambles fell 1.1 per cent to $18.78, and Telstra lost 1.2 per cent to $4.02.

The index’s biggest detractor was Neuren Pharmaceuticals. The pharmaceutical drug developer’s shares closed 8.3 per cent lower at $11.01. Its ASX-listed partner Acadia Pharmaceuticals has submitted a marketing authorisation application to the European Medecines Agency for its treatment for genetic disorder Rett syndrome.

However, Neuren does not expect to receive approval until the first quarter of 2026. Acadia shares also dropped 5.6 per cent to $16.90.

Stocks in focus

In corporate news, International Graphite and Pilbara’s shares leapt after the West Australian government doled out a combined $19 million in loans to the miners as part of a wider funding push for the state’s green energy projects.

All Ordinaries-listed International Graphite rocketed 25 per cent higher at 6¢ while Pilbara rose 4.1 per cent to $2.29.

Arafura Rare Earths′ shares also soared on news it will get $200 million from the government’s National Reconstruction Fund to support a new mine and processing facility. The shares closed up 17.4 per cent at 14¢.

AVJennings could be the subject of a bidding war after Singapore-listed developer and investor Ho Bee Land launched a $391 million takeover proposal, topping an existing offer for the home builder. The shares rocketed 7.8 per cent to $69¢.

And Baby Bunting rallied 13.9 per cent to $1.80 after the retailer reported a 37 per cent jump in pro forma net profit to $4.8 million for the full year, as well as stronger trading in the last few months of 2024.