Australian shares surge as inflation eases, Rio rallies
Australian stock market investors have breathed a sigh of relief after a drop in inflation, which is expected to give the central bank breathing room.
Australia’s share market is trading at its highest value since March after headline inflation eased in June, softening the odds of an incoming interest rate hike.
The benchmark S&P/ASX 200 index jumped 112.2 points on Wednesday, up 1.25 per cent, to 9060, as the broader All Ordinaries gained 108.8 points, or 1.19 per cent, to 9220.8.
Headline inflation fell to 3.8 per cent in the 12 months to June, down from 4 per cent in the year to May, indicating the Reserve Bank is making ground in its fight against inflation.
Sign up to The Nightly's newsletters.
Get the first look at the digital newspaper, curated daily stories and breaking headlines delivered to your inbox.
By continuing you agree to our Terms and Privacy Policy.However, the central bank’s preferred trimmed mean price growth measure - or core inflation - held steady at 3.6 per cent, which was slightly below consensus estimates but still well above its 2-to-3-per cent target range.
“Today’s figures suggested the inflation fire was finally beginning to lose some oxygen, giving the Reserve Bank its first genuine sigh of relief in months,” Global X ETFs senior investment strategist Marc Jocum said.
All 11 stock market sectors improved as the bourse narrowed in on its best day in four weeks.
Rio Tinto shares jumped almost 5 per cent as the miner grew its bottom-line, first-half net profit by 47 per cent to $US6.7 billion ($A9.6 billion) and lifted its free cash flow by 75 per cent to $US3.8 billion.
The broader materials sector advanced by more than 1 per cent, with BHP and Fortescue improving despite copper and iron ore futures holding roughly steady.
Gold miners were mixed as the precious metal continued to linger near $US4025 an ounce.
Healthcare stocks outperformed as the sector rocketed more than 3.7 per cent higher with a strong lead from CSL, as the biotech giant announced clinical trials to test immunoglobulin manufactured with its next-generation Horizon 2 process.
The heavyweight financials sector improved and came within 0.7 per cent of its all-time high as ANZ and NAB led the big four banks higher, while Macquarie, insurers and most investment firms improved.
The energy sector advanced as oil prices rebounded on reports that the US intercepted a volley of Iranian missiles targeting military bases, fracturing peace hopes after days of halted hostilities.
Woodside shares gained one per cent after its second-quarter operating revenue swelled by 28 per cent to $US4.2 billion, although it has trimmed the upper end of its full-year production guidance range to 185 million barrels from 186 million barrels.
In company news, shares in Perpetual Ltd eased after the financial services group knocked back an improved offer from Swedish private equity giant EQT.
Nickel Industries rose more than two per cent after a strong June quarter update and news it had produced its first mixed hydroxide precipitate from its Excelsior Nickel Cobalt project in Indonesia.
The Australian dollar was buying 69.46 US cents, down from 69.71 US cents on Tuesday at 5pm AEST as the local interest rate outlook continues to soften.
