ASX 200 Eases as Inflation Risks Linger

The S&P/ASX 200 edged lower on Thursday, closing around 8,525 after two sessions of gains, as investor sentiment weakened amid a notable drop in U.S. stock futures following conflicting statements from Washington and Tehran over Middle East peace efforts. While the U.S. claimed talks are underway, Iran insisted it has no intention of negotiating. Locally, RBA Assistant Governor Christopher Kent warned that prolonged conflict could lift inflation and long-term expectations, stressing the need to prevent surging energy prices from unsettling inflation expectations. Miners slipped 0.6% on softer iron ore prices amid fears of production cuts in China’s Tangshan hub, while gold stocks fell 2.1%, led by Ramelius Resources (-3.3%). Financials were flat, with mixed moves among the big four banks. Energy stocks climbed 1.5% as oil prices advanced, amid solid gains from Woodside Energy (2.3%) and Yancoal Australia (1.1%).

Australian equities edged lower on Thursday morning deals, hovering near 8,524 after two sessions of gains, as traders weighed caution from the central bank. The RBA warned that a global supply shock from the war in Iran could lift inflation and long-term expectations, particularly amid persistent capacity pressures. Assistant Governor Chris Kent noted the board will continue balancing offsetting forces to guide monetary policy. On fresh data, Australia's headline CPI slipped to 3.7% in February from 3.8% previously, while trimmed mean CPI fell to 3.3%, below forecasts and January’s 3.4%. Still, losses were partly offset by Wall Street’s positive lead Wednesday, amid hopes for progress toward ending the conflict. Consumer durables, non-durables, and commercial services lagged, while strength in logistics, process industries, and energy minerals capped weakness. Early decliners included PLS Group (-2.7%), Aristocrat Leisure (-1.7%), NAB (-1.0%), and Sigma Healthcare (-1.1%).

The S&P/ASX 200 jumped 155 points, or 1.85%, to close at 8,534 on Wednesday, its strongest daily advance since February 9 and extending the prior session’s strength. The rally tracked a rebound in U.S. futures after President Donald Trump signaled progress in talks to end the Middle East war, including concessions from Tehran, lifting global risk appetite. Domestically, Australia's annual inflation eased unexpectedly, with headline CPI edging lower to 3.7% in February from 3.8% in the prior two months, while trimmed mean CPI slipped to 3.3%, below forecasts and January's reading of 3.4%. Markets now price a roughly 50% chance of an RBA rate hike to 4.35% in May. Mining stocks gained, with Rio Tinto climbing 1.6% after a AUD 2 billion government pledge to support Boyne smelter operations. Financials rose 1.3%, while gold miners surged 8.2%, driven by Evolution Mining (8.5%). In contrast, energy lagged, with Santos down 2.3% and Woodside off 3.2%.