ASX follows Wall Street gains despite firmer-than-expected US CPI data

Local shares rose on Wednesday, led by retail and bank stocks, after a positive lead from Wall Street.

Australian shares pushed higher for a second consecutive session on Wednesday after Wall Street shrugged off firmer-than-expected US inflation data overnight.

The benchmark index, the S&P/ASX200 added 0.2 per cent, or 16.9 points, to close at 7729.4, with seven of 11 industry sectors finishing in the green, led by gains in retail, healthcare and banking stocks.

Meanwhile, the broader All Ordinaries also advanced by a similar amount to 7989.5.

US equities rallied overnight with the S&P500 resetting its record at 5175.27, up 1.1 per cent, even as fresh CPI data for February came in just above market expectations and bond yields rose.

US equities surged overnight, with the S&P500 resetting its record, despite firmer-than-expected CPI data. Picture: AFP / Spencer Platt

Perpetual’s head of investment strategy Matt Sherwood said despite the modest uptick in inflation, investors expected the US Federal Reserve wouldn’t delay rate cuts beyond June.

“You’d have to see another solid print in March, and probably at a higher rate, for the Fed to really question whether they have the room to cut rates given the disinflation we have seen over the past six months or so,” Mr Sherwood said.

However, Mr Sherwood added that the Fed would have to see momentum for services inflation ease before it was confident it could cut rates.

“There’s some risk that the market’s expectations of a start [to cuts] around mid-year may be a bit late,” he added.

Locally, consumer discretionary stocks were the top gainers, adding 1.3 per cent, with Premier Investments adding 2.6 per cent to $30.17 and Aristocrat climbing 2.1 per cent to $46.86.

Financials also performed strongly, up 0.9 per cent. Macquarie hit an intraday high of $200 a share, its highest since May 2022, before closing at $199.61, up 0.9 per cent.

Material stocks were the biggest laggards, easing 0.8 per cent, with gold stocks dipping as prices for the precious metal slipped to $US2164 an ounce following the inflation print.

Northern Star Resources sank 2.3 per cent to $13.75, Bellevue Gold slipped 1.9 per cent to $1.58, and Regis Resources eased 1.5 per cent to $1.95.

Elsewhere in the resources sector, iron ore miners extended their sell-off as prices for the commodity tumbled on high inventories and weak demand from Beijing.

After a brief pause over Tuesday’s session, iron ore miners resumed their sell-off on Wednesday. Picture: Supplied.

On the Singapore exchange, iron ore futures on the April contract shed 4.3 per cent to $US104.55 a tonne – a six month low. In mid-February, prices for the key steel ingredient were fetching more than $US130 a tonne.

Despite the decline, it was a mixed session for the heavyweight producers. While BHP slipped 1.3 per cent to $41.95 and Fortescue shed 1 per cent to $24.50, Rio Tinto advanced 1.4 per cent to $116.95.

Mr Sherwood said China was in the early stages of a five-year “household deleveraging cycle” which would see a structural decline in housing construction, and consequently iron ore prices.

“While there will be increased infrastructure investment to offset the growth impact here, it just won’t be as steel intensive,” he added.

In a note to clients, CBA commodity strategist Vivek Dhar warned that iron ore prices would likely continue to erode, dipping below $US100 in the short term, as profit margins across China’s steel mills fell.

Despite the drag from iron ore miners, the Australian dollar finished higher at US66.12c.

In corporate news, Liontown Resources jumped 6.1 per cent to $1.40 as it announced a new $550m debt deal, funded in part by Commonwealth Bank and NAB, for its Kathleen Valley lithium mine located in Western Australia.

Meanwhile, fellow miner Core Lithium plunged 9.1 per cent to 20c, its biggest intraday loss since January 8, after it released dismal half-year results.

Unveiling the results, which showed a post-tax loss of $167.6m, chief executive Gareth Manderson announced his resignation, with current CFO Doug Warden to head the miner in the interim.

Penfolds owner Treasury Wine Estates rallied 1.5 per cent to $12.46 on news that the Chinese Ministry of Commerce was proposing a removal of damaging tariffs affecting growers. A final determination will be released in coming weeks which could deliver the firm an extra $100m in profits, analysts predicted.

Artificial intelligence firm Appen shed 10.7 per cent to 97c after receiving a takeover bid from US rival Innodata. Yesterday, shares vaulted 30.1 per cent, and were later placed in a trading halt.