Aust shares close at record high after inflation data

The Australian share market has rallied to close at an all-time high after cooler-than-expected inflation data raised the chances of quicker rate cuts.

The benchmark S&P/ASX200 index on Wednesday finished up 80.5 points, or 1.06 per cent, to 7,680.7, smashing through its previous all-time record high of 7,632.8 set back on August 13, 2021.

The broader All Ordinaries gained 77.8 points, or 0.99 per cent, to a similar record close of 7,912.8.

The ASX200 finished January up 1.2 per cent for its third straight month of gains and its eight-day winning streak is its longest since a similar run in late March and early April of 2023.

“Long live the #BullMarket!” tweeted Market Index analyst Carl Capolingua after the record high, adding a bull emoji.

“Today’s new record high is a bit of moment where we’re seeing people sitting up in their seats, and noting that the market is encouraging again,” Moomoo market analyst Jessica Amir told AAP.

“People are feeling pretty chuffed,” Ms Amir added. “It’s just something that we needed. Psychologically, we had to hit these higher highs. A lot of people have been sitting on some losses, so this is a good step in the right direction.”

Aanother pleasing factor as the Australian market enters earnings season, is expectations have been quite low, Ms Amir added.

“What that means is that we’re kind of set up for more beats, and more beats is good for stocks,” she said, referring to when a company’s earnings beat expectations.

The ASX200 actually started the morning down by as many as 30 points in the first hour of trading, but shot up after the release of official inflation data shortly before noon.

The Australian Bureau of Statistics reported that consumer prices rose 0.6 per cent in the December quarter, the smallest quarterly rise since March 2021.

The annual inflation rate was 4.1 per cent, down from the 5.4 per cent in the previous quarter and under economists’ consensus expectations for a 4.3 per cent rise.

“This is good for consumers, good for most businesses and good for equity markets,” said Rob Talevski, Webull’s Australia CEO.

“”It is not surprising to see the ASX200 rally immediately.”

AMP deputy chief economist Diana Mousina said the inflation readout and other recent economic indicators would lead the Reserve Bank to keep interest rates on hold next Tuesday and begin cutting them by June.

All 11 sectors of the ASX rose on Wednesday, with the interest-rate-sensitive property sector the biggest gainer, climbing two per cent.

The Big Four banks all rose, with ANZ, NAB and Westpac each rising 1.5 per cent, to $27.20, $32.60 and $24.18, respectively. CBA gained 1.3 per cent to $117.53.

In the heavyweight mining sector BHP rose 0.5 per cent to $47.27, Fortescue climbed 0.6 per cent to $29.88 and Rio Tinto gained 0.4 per cent to $132.92.

IGO dropped 2.2 per cent to $7.56 after the Perth-based miner said it would will cease development on the troubled Cosmos nickel mine it has spent more than $500 million working on since purchasing it just two years ago.

Nickel Industries was the biggest gainer in the ASX200, rising another 10 per cent, following its 20.8 per cent rise on Tuesday.

Elsewhere, Select Harvests rose 17.0 per cent to a two-month high of $3.72 after the nut grower reported strong 2024 crop volumes and strengthening market pricing.

The Australian dollar was buying 65.75 US cents, from 66.16 US cents at Tuesday’s ASX close.

ON THE ASX:

* The benchmark S&P/ASX200 index finished Wednesday up 80.5 points, or 1.06 per cent, to 7,680.7.

* The broader All Ordinaries gained 77.8 points, or 0.99 per cent, to 7,912.8.

CURRENCY SNAPSHOT:

One Australian dollar buys:

* 66.15 US cents, from 65.90 US cents at Monday’s ASX close

* 97.46 Japanese yen, from 97.59 yen

* 61.15 Euro cents, from 60.79 Euro cents

* 52.08 British pence, from 51.88 pence

* 107.75 NZ cents, from 108.12 NZ cents.