ASX notches up another win as inflation fears ease

The Australian sharemarket has closed out another session in the green as better-than-expected inflation numbers and bullish sentiment in the US eased the nerves of investors.

The S&P/ASX 200 index ended the trading day 56.5 points, or 0.7 per cent higher to 7999. Consumer staples, materials and financial stocks drove the bourse higher, amid bullish sentiment that the Albanese government’s pre-election budget presented is unlikely to alter the Reserve Bank’s path to more interest rate cuts.

The Australian dollar was slightly higher against the greenback at US63.08¢, up from US62.91¢ at 5pm on Tuesday.

Wall Street was steady on Tuesday.Credit: AP

Inflation nudged down across the country in February, giving more confidence to the RBA that price pressures are easing. The Australian Bureau of Statistics reported on Wednesday that the monthly inflation rate was 2.4 per cent for the year to February.

It had been 2.5 per cent in the year to January, and economists had expected it to stay at that level. The measure of underlying inflation also eased to 2.7 per cent from 2.8 per cent.

The big four banks all closed higher, with ANZ bouncing 3 per cent higher. Commonwealth Bank – the biggest stock on the ASX – gained 1.1 per cent. Westpac rose 1.2 per cent and NAB was 0.7 per cent higher.

Mining stocks shed some of their early gains but still closed in the green. Rio Tinto jumped by 1 per cent while BHP edged up 1.2 per cent, and Fortescue closed 0.7 per cent higher. Paladin Energy dived 12 per cent. The uranium miner retracted its production guidance for the 2025 financial year, after one of its mines in Namibia was forced to temporarily suspend production due to heavy rainfall.

Technology stocks also notched up a solid session, with TechnologyOne rising 2.1 per cent and WiseTech Global ending the session 0.3 per cent stronger. WiseTech shares had made a bright start to the session but fell off in the afternoon on news that the country’s biggest super fund, AustralianSuper, had sold its entire $580 million shareholding in the company.

Meanwhile, Woolworths and Coles both enjoyed a post-budget boost, closing 1.7 per cent and 1.5 per cent stronger respectively.

Overnight, Wall Street edged higher in a quiet session after roaring the day before on hopes that President Donald Trump’s tariffs may not be as sweeping as earlier feared.

The S&P 500 added 0.2 per cent after jumping 1.8 per cent on one of its best days of the last year. The Dow Jones inched up by 4 points, or less than 0.1 per cent, and the Nasdaq composite rose 0.5 per cent.

US stocks have recovered a chunk of their losses since falling 10 per cent below their all-time high earlier this month, their first “correction” since 2023. The S&P 500 is now down 6 per cent from its record, and that drop has left the market looking less expensive than before, which had been a major criticism following its euphoric rise in earlier years.

But strategists along Wall Street warn that more sharp swings are still likely on the way, with an April 2 deadline looming. That’s what Trump has called “Liberation Day”, when he will begin tariffs on trading partners that he says will roughly equal what he sees as the burden each of them puts on the United States. Monday’s spurt for Wall Street came on hopes that Trump’s “reciprocal” tariffs may be more targeted than had earlier been feared.

“We think markets are underplaying the risk of a tariff shock in early April,” according to Ajay Rajadhyaksha, global head of research at Barclays.

He points not only to traders’ expectations for upcoming volatility in the stock market but also to the values of the Mexican peso and Canadian dollar, which haven’t weakened substantially since the last postponement of tariffs.

Even if Trump’s tariffs do end up being less painful for the global economy than feared, all the dizzying talk about them has already soured confidence among US households and businesses. The fear is that could lead them to cut back on their spending and freeze the economy.

A report on Tuesday showed that pessimism among US households is only increasing. The Conference Board’s measure of consumer confidence fell by more than expected, mostly because of a tumble for expectations about upcoming conditions in the short term. That dropped to its lowest level in 12 years and is sitting “well below the threshold of 80 that usually signals a recession ahead”.

Like other recent surveys, the data showed US households are much more concerned about where the economy is heading than where it is currently. So far, actual economic activity and the job market seem to be holding up despite the worsening moods of US companies and consumers.

On Wall Street, Trump Media & Technology Group climbed 8.9 per cent after the company behind the president’s Truth Social platform said it had reached an agreement with Crypto.com to offer a suite of “America-First” investment funds.

The exchange-traded funds will hold bitcoin and other digital assets, along with what TMTG called “securities with a Made in America focus spanning diverse industries such as energy”.

Tesla rose 3.4 per cent after drifting between modest gains and losses following more grim sales figures from Europe. Its stock nevertheless remains down nearly 29 per cent for 2025 so far.

European sales of Tesla’s electric vehicles dropped by nearly half during the first two months of the year, compared with a year earlier, even as the overall market for battery-powered cars grew, according to the European Automobile Manufacturers Association.

with AAP, AP

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