ASX 200 Closes Flat After Hotter-than-Expected Inflation

Australia’s ASX 200 rose 45 points, or 0.5%, to end at 8,892 on Thursday, recovering from a subdued finish in the prior session. Investors continued to assess the Federal Reserve’s decision to hold rates steady and signals of fewer policy meetings next year, prompting a reassessment of the rate outlook. Financials, energy minerals, and communications led gains, offsetting losses in retail, manufacturing, and tech. Gains were tempered, however, by caution ahead of official PMI data in top trading partner China due over the weekend. Locally, hotter-than-expected September inflation strengthened bets that the Reserve Bank of Australia will raise its cash rate again at next week’s meeting, following four hikes this year. The four major banks rallied 1.9%–2.3%, while Lynas Rare Earths (4.2%), Charter Hall Group (3.3%), and Bendigo & Adelaide Bank (2.5%) also advanced. In contrast, BHP Group fell 0.9%, alongside Wesfarmers (-4.0%), Woolworths Group (-3.3%), and Ramsay Health Care (-1.5%).

Australian stocks rose 23 points, or 0.3%, to 8,871 in early trade on Thursday after a subdued close in the prior session. Sentiment drew support from Wall Street’s gains overnight as the Fed held interest rates steady, in line with expectations, while traders assessed another round of earnings results. Meanwhile, local data showed Q3 export prices rose the most in three quarters, while import prices unexpectedly fell. However, gains were capped by higher-than-expected September inflation, strengthening views that the Reserve Bank will raise its cash rate again next week following four hikes this year. RBA Governor Bullock has warned that inflation could remain elevated longer than projected in August. Financials, energy minerals, and industrial services led gains, partly offset by losses in retail, manufacturing, and non-energy minerals. The four major banks rallied between 1.2%–1.8%. Other major movers were Goodman Group (3.0%), Challenger Ltd. (2.0%), and Cochlear Ltd. (1.6%).

Australia’s ASX 200 ended little changed at 8,847 on Wednesday, as gains in non-energy minerals, consumer durables, and tech stocks were largely offset by losses in energy minerals, utilities, and logistics. The benchmark index reversed early gains after steeper-than-estimated inflation strengthened bets on a near-term Reserve Bank rate hike. Annual headline inflation notched a six-month high of 4.3% in September, moving further above the central bank’s 2–3% target. Meanwhile, Governor Bullock delivered hawkish remarks before lawmakers, warning that inflation would likely remain elevated longer than the August projection. In the U.S., stock futures were mixed ahead of the Fed's rate decision later today. The big four banks pared early gains, up 0.3%–1%. Lynas Rare Earths jumped 7.3% after a recent low, while Sandfire Resources rose 4.8% and PLS Group gained 3.8%. On the downside, Reece plunged 8.8%, followed by Ampol (-3.8%), Yancoal Australia (-3.7%), and Whitehaven Coal (-2.4%).