After starting Wednesday’s trading session in negative territory, Australia’s domestic sharemarket staged a sharp midday turnaround, driven by unexpectedly soft headline inflation data that immediately cut market expectations of another Reserve Bank of Australia (RBA) interest rate hike in June.
The country’s benchmark ASX 200 closed up 59.90 points, or 0.69%, at 8717.70, while the broader All Ordinaries index gained 62.60 points, or 0.70%, to settle at 8945.20. The Australian dollar weakened against the U.S. dollar following the data release, dipping to 71.62 US cents by market close.
Ten of the 11 measured industry sectors finished the trading day in positive territory, with information technology and consumer discretionary stocks leading the upward charge. Among tech shares, logistics software firm WiseTech Global rose 1.43% to $36.93, data center operator NEXTDC climbed 3.75% to $15.20, and enterprise tech provider Technology One added 0.60% to $30.17. In the consumer discretionary space, retail conglomerate Wesfarmers gained 1.41% to $77.56, electronics retailer JB Hi-Fi rose 1.18% to $73.95, and furniture retailer Harvey Norman jumped 2.47% to $4.56.
Clive Maguchu, senior strategist at State Street Investment Management, explained that the inflation print was the core catalyst for the market’s sudden reversal. “The headline inflation number came in at 4.2% for the 12 months to April, which is a bit lower than the market consensus expectation of 4.4%,” Maguchu noted. He added that lower fuel price gains, partially driven by fuel excise discounts, were a key factor pulling down the headline figure. However, Maguchu also pointed out that not all inflation signals were positive: the RBA’s closely watched trimmed mean inflation, which strips out volatile price movements to track underlying price pressures, ticked up to 3.4% year-on-year in April, leaving residual hawkish pressure on the central bank.
Even with the uptick in core trimmed mean inflation, money markets quickly re-priced the probability of a June rate hike, slashing those odds sharply. The shift in rate expectations dragged three of Australia’s four largest banks into negative territory by close: Westpac fell 0.60% to $36.39, National Australia Bank dropped 0.63% to $37.75, and ANZ slipped 0.25% to $35.57. Only the Commonwealth Bank bucked the trend, gaining 0.31% to $164.81.
Other notable individual stock movements marked the session. Alcohol and retail group Endeavour Group slumped 4.87% to $2.93 after releasing a strategic update that included a restructuring of its wine operations, designed to cut $300 million in costs by fiscal year 2029. The firm also announced it would reduce dividend payouts, targeting a new payout ratio of 50 to 75% of group underlying net profit after tax.
Online travel firm Web Travel outperformed market expectations, gaining 2.1% to $2.43 after updating the market on a stronger-than-projected 2026 financial result, even amid ongoing tourism headwinds stemming from US-Iran tensions. The firm’s underlying net profit after tax rose 8% to $85.9 million. Market operator ASX Ltd extended its recent sell-off, plummeting 9.73% to a decade-low of $46.06 a day after the company lifted its capital expenditure guidance to a range of $180 million to $200 million, up from the prior forecast of $160 million to $180 million. Finally, defence shipbuilder Austal gained 7.59% to $4.25 despite no new corporate announcements accompanying the rally.