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Index Update: The Australian share market retreated on Wednesday, with the S&P/ASX 200 falling 81.40 points, or 0.92%, to close at 8,764.50, slipping below its 50-day moving average. The index has declined 0.61% over the past five sessions and now sits 3.20% beneath its 52-week high. Nine of the 11 sectors finished lower, mirroring the broader market weakness. Utilities was the standout performer, adding 0.53% on the day and up 0.28% over the week, while financials and healthcare led the declines with losses of 1.76% and 1.29%, respectively.

The session marked the sharpest sell-off in three weeks, driven by losses in major banks and technology names, as investors reassessed the likelihood of rate cuts in the US and Australia. Sentiment was dampened by overnight comments from US Federal Reserve Chair Jerome Powell, who cautioned that near-term inflation risks remain “tilted to the upside”.

Macro Update: In Australia, inflation edged higher in August, with the monthly Consumer Price Index (CPI) rising 3.0% YoY, up from 2.8% in July, as per the data released by the Australian Bureau of Statistics. This is the highest annual rate since July 2024. Housing costs (+4.5%), Food and non-alcoholic beverages (+3.0%), and Alcohol and tobacco (+6.0%) were the main drivers. Trimmed mean inflation, a key measure of underlying pressures, eased slightly to 2.6% from 2.7% in July.

Top Market Movers: DroneShield Ltd (ASX:DRO) led the gains, rising 6.21% to close at AUD 3.76. Pilbara Minerals Ltd (ASX:PLS) followed with a 5.24% increase to finish at AUD 2.41, while Mineral Resources Ltd (ASX:MIN) advanced 4.51% to end at AUD 40.57. On the downside, Telix Pharmaceuticals Ltd (ASX:TLX) recorded the sharpest fall, dropping 5.62% to AUD 15.46. Atlas Arteria (ASX:ALX) slipped 5.49% to AUD 4.99, and James Hardie Industries (ASX:JHX) declined 4.77% to close at AUD 28.15.

Commodity Update: The U.S. dollar firmed from near one-week lows on Wednesday as traders priced in two more rate cuts this year, despite Fed Chair Jerome Powell’s cautious stance. Gold dropped 0.73% to USD 3,787.50, silver fell 0.98% to USD 44.17, and copper eased 0.09% to USD 9,982.10. Brent crude rose 0.40% to USD 67.88, supported by stalled Kurdish oil exports, a bigger U.S. inventory draw, and rising geopolitical tensions around Russia.

Our Stance: The Australian share market retreated on Wednesday, with the S&P/ASX 200 closing 0.92% lower at 8,764.50, weighed down by financials and healthcare, while utilities provided the only notable support. The sell-off, the sharpest in three weeks, came as investors digested cautious comments from US Fed Chair Jerome Powell on inflation risks, which tempered expectations of near-term rate cuts both domestically and abroad. On the macro side, Australia’s inflation edged higher to 3.0% in August, the fastest pace since July 2024. On Tuesday, Wall Street also paused its rally as stretched valuations and Powell’s remarks on stock prices being “fairly highly valued” weighed on sentiment. In commodities, gold, silver, and copper eased as the US dollar firmed, while Brent crude inched higher on supply disruptions and geopolitical concerns. Overall, investors remain cautious, balancing resilient inflation with tempered hopes for monetary easing, while monitoring global commodity movements and central bank signals.

The S&P/ASX 200 Index experienced a challenging session, closing at 8,764.50 with a bearish candlestick formation on rising trading volume. This combination indicates the presence of short-term selling pressure and signals a cautious sentiment among market participants. From a daily perspective, the index is trading below the 21-period SMA, which has now turned into a key resistance level. This suggests that any immediate recovery attempts could face overhead supply near this zone. A critical support lies at 8,680.70; holding above this level will be crucial for preventing a deeper retracement and for preserving recent gains. On the weekly timeframe, however, the broader outlook remains constructive. The index continues to trade above its 21-period SMA, reflecting resilience and pointing toward the potential for sustained bullish momentum over the medium to long term. This alignment across multiple timeframes suggests that while near-term volatility may persist, the underlying trend structure remains positive.