The sharemarket advanced on Wednesday after an unexpected slowdown in headline inflation for April all but ensured the Reserve Bank of Australia will be sidelined on interest rates at its next board meeting in June.

The S&P/ASX 200 Index closed up 59.90 points, or 0.7 per cent, to 8717.70, reversing earlier losses before the data hit. Ten of the 11 benchmark sectors were higher.

A temporary reduction in the fuel excise helped inflation to slow to 4.2 per cent in April which was below the 4.4 per cent consensus. The RBA’s preferred gauge – the trimmed mean – still rose to 3.4 per cent.

Still, it was enough for money markets to halve expectations of rate increase at the RBA’s June meeting to just a 6 per cent probability with only 0.20 percentage points now priced in for the rest of the year.

“Inflation was probably a bit better than markets had fears, which has slightly amended interest rate expectations, and marrying into that is the tax changes proposed in the federal budget with could weaken demand,” said UBS Global Markets executive director Rob Taubman.

“There is undoubtedly a lot of caution within Australian equity investors against an uncertain backdrop of profit adjustments, the federal budget, inflation and interest rates, this is resulting in lower volumes.”

Interest-rate sensitive tech stocks paced the gains bolstered by AI-driven rally by offshore peers. Data centre operator NextDC rose 3.8 per cent to $15.20 and Megaport 8.6 per cent to $14.98.

The mining giants, meanwhile, climbed as aluminium hit a four-year high and copper prices remained elevated. BHP advanced 1.5 per cent to $61.28 and South32 3.5 per cent at $4.79.

Banks had a mixed session with Commonwealth Bank up 0.3 per cent to $164.81 while ANZ lost 0.3 per cent to $35.57, and National Australia Bank by 0.6 per cent to $37.75.

Westpac fell 0.6 per cent to $36.39 after the federal court ordered it to pay a $26 million penalty for financial hardship failures, following legal action launched by the Australian Securities and Investments Commission.

And the sharemarket operator, ASX Ltd, plunged to 9.7 per cent to a 10-year low of $46.06, extending Tuesday’s record 13.3 per cent sell-off. Analysts downgraded the group after it flagged a sharp increase in its cost base for the coming financial year.

Stocks in focus

In company news, Endeavour Group slid 4.9 per cent to $2.93 following plans to sell most of its vineyard and winery assets and target $300 million in cost savings as part of a turnaround plan.

Web Travel gained 2.1 per cent to $2.43 as EBITDA for the full-year came in 3 per cent of adjusted forecasts despite geopolitical disruption.

Southern Cross Media advanced 7.8 per cent to 62.5¢ after billionaire Gina Rinehart emerged as a major shareholder, after lending tens of millions of dollars to Bruce McWilliam to finance his 9 per cent stake in the group.

Nufarm rallied 13.7 per cent to $2.91 after it delivered a half-year result broadly in line with expectations with stronger momentum in trading and a reaffirmed full-year outlook.