The sharemarket gave up early gains on Wednesday after a warning from the Reserve Bank of Australia on inflation prompted traders to ramp up the possibility of an interest rate rise next month.
The S&P/ASX 200 Index was down 8.4 points or 0.1 per cent to 8808.5 as at 2.01pm (AEDT), after climbing by as much as 20 points at the open, buoyed by a rebound in the US tech stocks on Wall Street.
But hawkish comments from the RBA’s deputy governor Andrew Hauser at the Citi investment conference in Sydney this morning weighed on the local bourse as traders pivoted on their rate expectations.
Hauser said the central bank faced “hard choices” at its next policy meeting in less than two weeks, given inflation was “materially worse” than the RBA’s own forecasts. That prompted traders to ramp up the possibility of a fifth rate rise next month, pricing in a 43 per cent chance.
Commodities offered little relief, with oil rising above $US110 a barrel after Iranian state media reported an unidentified supertanker struck a sea mine in the Strait of Hormuz.
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