‘Reality check:’ Markets fall on weaker than expected inflation figures

The ASX closed down 0.8 per cent as investors factored in the unlikely chance of getting a rate cut following fresh inflation data on Wednesday.

The Australian sharemarket traded lower on Wednesday after investors priced in stronger than expected inflation figures reducing the chance of a rate cut in 2024.

The benchmark ASX 200 index declined by 68.80 points, or 0.83 per cent, to finish the session at 8,180.40 points.

The broader All Ordinaries fell by 66.40 points, or 0.78 per cent, to close at 8,439.50 points.

The Australian dollar was trading slightly down at US65.40c.

The ASX ended with 10 of 11 sector trading lower with only real estate investment trusts rising as a sector on Wednesday.

Moomoo’s market analyst Jessica Amir said the markets fell as investors hopes for a rate cut were dashed on the latest consumer price index figures, which dropped to a three-year low of 2.8 per cent.

“Fat chance of a rate cut folks, inflation is well above the RBA’s target while unemployment is strong,” Ms Amir said.

10 of the 11 sectors fell on the ASX during Wednesday’s trading. Picture: NewsWire / Max Mason-Hubers

Wednesday’s figures released by the Australian Bureau of Statistics was the first time the quarterly CPI dipped into the central bank’s target range between 2 to 3 per since March 2021.

However the all-important underlying inflation, which removes any volatile price changes, remained above target at 3.5 per cent.

Ms Amir said the inflation reading was a “reality check” for markets that had been talking up the possibility of an early rate reduction by the RBA.

“The devil is in the details. Trimmed mean inflation is what the RBA is preferred inflation gauge, fell exactly in line with expectations,” Ms Amir said.

“What also spooked the market was the prior inflation read was revised up, showing inflation actually rose last month.”

The worst performing share on the ASX was Woolworths which flagged weaker sales growth for 2025, as consumers are weighed down by cost of living pressures. WOW shares fell 6.035 per cent or $1.98 to $30.830.

Woolworths new CEO Amanda Barwell said customers were under real financial pressure and the company was offering value to them in the quarter.

Woolworths fell the most on the ASX, flagging customers are facing cost of living pressures. Picture: NewsWire / Max Mason-Hubers

“We offered our customers more specials with larger savings, increased shelf capacity of our more affordable own brands, made it easier to find the best unit prices, provided extra value through Everyday Rewards and brought a little joy to families through the Disney Worlds of Wonder collectibles campaign,” she said in a statement to the ASX.

One of the rare bright spots on the ASX on Wednesday were the gold and coal miners, both with real assets theoretically benefiting from a weaker economic backdrop.

Leading the way was De Grey Mining, which is up 3.10 per cent or $0.04 to close out at $1.50 per share.

“With investors taking their money out of traditional equities and the gold price hitting a record high, gold stocks are doing well on the ASX today,” Ms Amir said.

“China is also buying a record amount of Australian coal, pushing up the coal price. This is helping investors position their portfolio investors regardless of how our economy is going.

Originally published as ‘Reality check:’ Markets fall on weaker than expected inflation figures