The sharemarket rallied sharply on Wednesday after August inflation data came in lower than expected, reducing the chances of an aggressive tightening cycle by the Reserve Bank of Australia.
The S&P/ASX 200 Index rose 80 points, or 0.9 per cent, to 8789.3 on Wednesday, with 10 out of 11 sectors in the green, led by real estate.
August inflation data saw the consumer price index pick up to 4 per cent year on year, up from 3.5 per cent in July, according to the Australian Bureau of Statistics. On a monthly basis, headline CPI came in at 0.4 per cent, down from 1 per cent in the previous period.
Market consensus was for monthly headline CPI to accelerate to 4.1 per cent for the 12 months to the end of August, with the market rewarding the slightly softer data.
“Combined with unemployment rising to 4.6 per cent … and the more dovish tone of yesterday’s RBA press conference, the case is building that market expectations for the peak cash rate have topped out,” said Betashares head of fixed income, Chamath De Silva.
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