Sticky services inflation persists as Telstra jacks prices, telco shares a big winner on Tuesday

Telstra jacking up phone plan prices led to a surge in trading in the telco on Tuesday, as the telecommunications behemoth reached a three month high.

Telstra’s shareholders have been rewarded by the telco’s decision to raise mobile plan prices higher than inflation, with the share price spiking during trading on the ASX on Tuesday.

Its share price gained 2.2 per cent by the closing bell to a three month high, finishing at $3.73.

It was a healthy day on the ASX, with all 11 sectors closing in the green.

As a whole the S&P/ASX 200 gained 0.9 per cent, or 66.5 points, to close at 7,829.7

Communications was the sector to make the most ground, gaining 1.4 per cent.

Alongside Telstra, real estate listing juggernaut REA Group went up 2.2 per cent ($196.86) and Airtasker rose 3.5 per cent to $0.295. The tasking-finding platform is up two thirds in the past year.

Telstra shares rose 2.2 per cent on Tuesday. Picture: NewsWire / Damian Shaw

IG market analyst Tony Sycamore said the most notable story of the day was “former market darling” Telstra hitting a three-month high.

“Telstra’s rally followed a larger than expected increase in mobile phone pricing plans, thought to be around 4-4.8 per cent, which provides another reminder that hot services inflation is yet to be tamed,” Mr Sycamore said.

The RBA board flagged services inflation as a “key uncertainty” last month.

“Further gains towards $4 appear likely as the telco giant benefits from its pricing power operating within a cosy oligopoly framework,” Mr Sycamore said.

Telstra’s 4-4.8 per cent price increases on mobile plans engulfs the latest consumer price index rise.

Services inflation is a key uncertainty for the Reserve Bank. Picture: NewsWire / Gaye Gerard

For the March quarter, the CPI rose 3.6 per cent.

In a green clean sweep for the 11 sectors, the financial sector finished a nose behind communications.

Notable big upward movers include Insignia Financial gaining 13.64 per cent ($2.50) and Vaneck Bitcoin tacking on nearly four per cent to close at $17.39.

A suite of consumer sentiment surveys released Tuesday show the risk of an additional Reserve Bank rate hike before the New Year is weighing heavily on Australians.

Even so, the big four banks gained in trading.

Commonwealth closed at a record high of $128.69, up 2.22 per cent.

CommBank is up 30 per cent on the year. ANZ, Westpac and NAB traded upwards too, gaining between 1.4 and two per cent.

France’s topsy-turvy two weekend elections did little to curb investor confidence on Wall Street. Picture: Hannah McKay / POOL / AFP

Australian Ethical Investment took a big hit, losing 5.9 per cent to $4. Australian Ethical is up 27 per cent in the past 12 months though.

Energy was the only sector to make marginal gains, with the others all rising more than 0.3 per cent. Fruitful gains for the ASX erased Monday’s losses.

Gains in Aussie tech followed the lead of tech-heavy Nasdaq, and the S&P 500.

Boeing rose 0.5 per cent overnight even after agreeing to plead guilty to a criminal fraud charge stemming from two 737 jetliner crashes which killed 346 people.

US markets had an eye on the twisting, turning French elections and its effects on world markets too, though the surprise result failed to dent confidence on Wall Street.