Index Update: The S&P/ASX 200 staged a notable rebound on Wednesday, rising 154.90 points or 1.85% to close at 8,534.30, as easing inflation data lifted investor sentiment. The slight moderation in CPI reinforced expectations that interest rate pressures may begin to ease, prompting a buy across most sectors and driving the market higher. The advance was broad-based, with eight of eleven sectors closing in positive territory, reflecting improved investor sentiment. Materials led the charge, surging 4.41% and recovering from recent weakness, although the sector still remains down 1.85% over the past five days.

Gains were also seen across healthcare, consumer discretionary, and technology, while energy stood out as the key laggard, declining during the session. Despite the day’s rally, the index remains under pressure, down 1.23% over the past week and 2.07% year to date, highlighting ongoing volatility in the market.

Macro Update: Australia’s inflation story is showing early signs of cooling—but households are still feeling the heat where it matters most. New data from the Australian Bureau of Statistics revealed the Consumer Price Index rose 3.7% in the year to February 2026, easing slightly from January’s 3.8%. While the headline figure suggests inflation may be stabilising, the underlying pressure tells a more complex story. Housing costs remain the biggest pain point, surging 7.2% annually, driven by rising rents, new dwelling prices, and a sharp spike in electricity costs. Power bills alone jumped a staggering 37% over the year, intensifying cost-of-living concerns for households. Food prices climbed 3.1%, while recreation and culture rose 4.1%, adding to everyday spending pressures. Meanwhile, underlying inflation—measured by the trimmed mean—held steady at 3.3%, signalling that price pressures remain persistent beneath the surface.

Top Market Movers: Top gainers on the ASX were led by DroneShield (ASX:DRO), which surged to AUD 4.260, up AUD 0.690 or 19.33%, followed by Silex Systems (ASX:SLX), rising to AUD 5.550, gaining AUD 0.660 or 13.50%, and Vulcan Energy Resources (ASX:VUL), which climbed to AUD 3.290, up AUD 0.350 or 11.90%. On the downside, Karoon Energy (ASX:KAR) fell to AUD 1.910, down AUD 0.150 or 7.28%, Beach Energy (ASX:BPT) declined to AUD 1.250, losing AUD 0.070 or 5.30%, while New Hope Corporation (ASX:NHC) dropped to AUD 5.550, down AUD 0.290 or 4.97%.

Commodity Update: Currency markets showed early signs of fatigue in Asian trade on Wednesday, as traders remained cautious over U.S. President Donald Trump’s push to end the Iran conflict. While Trump indicated progress in discussions, Iran denied any direct negotiations, keeping uncertainty elevated. Gold surged 4.12% to USD 4,616.20, silver rose 6.07% to USD 73.95, and copper gained 1.53% to USD 12,242.00. Meanwhile, Brent crude declined 6.30% to USD 97.90, slipping below USD 100 amid easing supply concerns.

Our Stance: The S&P/ASX 200 rebounded strongly, rising 1.85% as softer inflation data from the Australian Bureau of Statistics lifted rate-cut expectations and boosted sentiment. Gains were broad, led by materials, while energy lagged. Despite this optimism, inflation at 3.7%—with housing and electricity surging—highlights persistent cost pressures. Strong moves in stocks like DroneShield Limited added momentum, alongside rising gold prices. The rally appears sentiment-driven rather than fundamentally strong. While easing inflation supports markets short term, sticky core pressures and sector divergence suggest volatility will persist, making selective investing crucial.

In its latest session, the S&P/ASX 200 edged higher by 154.90 points, forming a bullish candlestick that reflects a degree of buying interest in the market. However, despite this positive move, the broader technical structure remains cautious. The index continues to trade below its 21-period Simple Moving Average (SMA) on the daily chart, which is acting as a key resistance level and limiting further upside momentum. Unless the index manages to reclaim and sustain above this barrier, the bullish outlook is likely to remain constrained in the near term. On the downside, immediate support is seen near the 8,460.70 level, which will be critical to hold in order to stabilise sentiment and reduce the risk of a deeper corrective phase.