The Australian equities market experienced a broad downturn on Wednesday, defying robust performances in the energy and mining sectors, as an unexpectedly high inflation reading intensified fears of an imminent interest rate hike.
The benchmark S&P/ASX 200 retreated by 7.70 points (0.09%) to settle at 8933.90, while the broader All Ordinaries index declined 17.90 points (0.19%) to close at 9250.60. This downward trajectory occurred despite the Australian dollar briefly touching a two-year peak of 70.16 US cents before moderating to 70.03 US cents.
Market dynamics revealed a stark sectoral divide. Energy stocks emerged as clear outperformers, propelled by West Texas Intermediate crude reaching a four-month high of $62.32 per barrel. Woodside Petroleum advanced 2.71% to $24.98, while Santos climbed 3.02% to $6.82.
The resources sector similarly demonstrated strength amid rising commodity prices. BHP Group appreciated 1.71% to $50.60, with Rio Tinto surging 2.39% to $154.82. Precious metals producers also joined the rally, with Northern Star Resources gaining 3.25%, Evolution Mining leaping 4%, and Newmont Corporation closing 1.58% higher.
This commodity-driven optimism was overwhelmingly offset by substantial declines across interest-rate-sensitive sectors. The catalyst was Australia’s trimmed mean inflation rate, which registered at 0.9% for the December quarter (3.3% annually), exceeding economist forecasts.
Technology stocks bore the brunt of the selloff. WiseTech Global plummeted 3.76%, Xero declined 1.92%, and Dicker Data slipped 0.88%. Consumer discretionary shares also retreated significantly.
Market analysts interpreted the inflation data as compelling evidence for monetary policy tightening. Betashares Chief Economist David Bassanese stated, ‘All up, it appears to be game, set, match for a rate rise at the February policy meeting.’ He further cautioned that additional rate increases might follow in May, though suggesting two hikes could sufficiently moderate economic growth and inflation pressures.
Individual stock movements included Boss Energy soaring 10% after revising cost guidance downward, while Life360 and Catapult Group experienced sharp declines amid company-specific developments.