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Index Update: Australian shares surged on Wednesday, with the ASX 200 closing up 0.60% or 51.80 points at 8,756.40, just 0.23% below its 52-week high, as easing inflation boosted rate cut expectations. June quarter CPI rose 0.7%, bringing annual inflation down to 2.1%, the lowest since March 2021. A-REITs gained 1.25%, Consumer Staples up 1.29%, and Financials added 1.13%, leading broad-based sector gains. Investors are now pricing in a potential RBA rate cut in August, fueling optimism in rate-sensitive sectors. Although the index was flat over the past five days, cooling inflation seems to have revived market sentiment.
Macro Update: Australia’s inflation rate continued to ease in the June 2025 quarter, with the Consumer Price Index (CPI) rising 0.7%, bringing annual inflation down to 2.1%, according to the Australian Bureau of Statistics. This marks a decline from the 2.4% annual rate recorded in March and represents the lowest annual inflation reading since March 2021. The trimmed mean inflation, a measure that excludes volatile price movements, also edged lower to 2.7% annually, compared to 2.9% in the previous quarter. Key drivers of the June quarter CPI increase included Housing (+1.2%), Food and non-alcoholic beverages (+1.0%), and Health (+1.5%), while declines in Transport (-0.7%) provided some offset.
Top Market Movers: Wednesday’s top gainers on the ASX 200 included Polynovo Limited (ASX: PNV), which jumped 7.76% to AUD 1.320, followed by West African Resources (ASX: WAF) rising 3.91% to AUD 2.390, and JB Hi-Fi (ASX: JBH) up 3.87% to AUD 110.270. On the downside, IGO Limited (ASX: IGO) fell 7.20% to AUD 4.640, Emerald Resources (ASX: EMR) slipped 6.25%, and Beach Energy (ASX: BPT) declined 3.73%.
Commodity Update: The euro hovered near a one-month low on Wednesday, pressured by recent losses amid concerns over the U.S.-EU trade pact. Investors awaited key policy meetings from the Federal Reserve and Bank of Japan. Meanwhile, the U.S. and China agreed to extend their tariff truce. Gold edged up 0.06% to USD 3,383.40, silver rose to USD 38.31, copper climbed 0.13%, and Brent crude gained 0.19% to USD 72.65 amid supply concerns.
Our Stance: Australian equities rallied midweek as easing inflation cemented expectations of a near-term rate cut, propelling the ASX 200 close to just 0.23% below its 52-week high. Investor focus is shifting toward a likely RBA rate cut in August. With CPI down to 2.1% and trimmed mean inflation easing to 2.7%, markets now anticipate a more accommodative monetary stance. Rate-sensitive sectors like A-REITs and Financials are outperforming, while commodity sentiment remains mixed. Despite global uncertainty, Australia’s inflation trajectory supports a constructive outlook for equities.
In its latest trading session, the S&P/ASX 200 Index advanced by 51.80 points to close at 8,756.40, buoyed by a bullish candlestick formation and strong trading volumes, both of which point to ongoing investor confidence and market enthusiasm. From a technical standpoint, the index continues to trade firmly above its 21-period Simple Moving Average (SMA), underscoring a constructive near-term outlook. A key level to monitor is the resistance at 8,800.50. A decisive breakout above this threshold would represent a significant bullish signal, potentially shifting broader market sentiment and paving the way for additional upside. Zooming out to the weekly timeframe, the index remains well-positioned above its 50-period SMA, reinforcing a solid long-term bullish structure. However, the sustainability of the current upward momentum hinges on the index’s ability to clear and maintain levels above the 8,800.50 resistance.
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