Index Update: The S&P/ASX 200 fell sharply on Wednesday, closing down 86.30 points, or 0.96%, at 8,926.20, slipping below its 20-day moving average. The Australian share market recorded its biggest drop in two months after a higher-than-expected quarterly inflation reading dampened expectations of another interest rate cut by the Reserve Bank this year. The benchmark index has now lost 1.15% over the past five sessions and sits 2.07% below its 52-week high. Sector performance was mixed, with seven of eleven sectors finishing lower. Materials emerged as the day’s standout performer, up 1.15% and 0.39% higher over the past week.

Macro Update: Australia’s Consumer Price Index (CPI) rose 1.3% in the September 2025 quarter and 3.2% annually, the highest quarterly rise since March 2023, according to the Australian Bureau of Statistics. The increase was led by higher electricity costs (+9.0%), housing (+2.5%), recreation and culture (+1.9%), and transport (+1.2%). Trimmed mean annual inflation, which excludes volatile items, rose to 3.0% from 2.7% in the June quarter, its first increase since December 2022. Electricity prices surged 23.6% annually, driving much of the overall inflation rise.

Top Market Movers: Among the top gainers on Wednesday, Boss Energy Ltd (ASX:BOE) surged 19.81% to close at AUD 1.905, followed by Nick Scali Limited (ASX:NCK) which advanced 12.72% to AUD 25.35, and Paladin Energy Ltd (ASX:PDN) up 11.32% at AUD 8.95. On the downside, DroneShield Limited (ASX:DRO) slipped 12.21% to AUD 4.17, Austal Limited (ASX:ASB) fell 7.10% to AUD 6.81, and Steadfast Group Limited (ASX:SDF) declined 5.13% to AUD 6.29.

Commodity Update: The U.S. dollar held near a one-week low ahead of the anticipated Federal Reserve rate cut. Gold slipped 0.52% to USD 3,962.40 per ounce, silver fell 0.12% to USD 47.26, and copper eased 0.28% to USD 10,995.00. Brent crude gained 0.30% to USD 64.58 as renewed Israel-Hamas conflict raised supply concerns. Oil prices rebounded after two days of losses, supported by geopolitical tensions and fresh U.S. sanctions on Russia.

Our Stance: Australia’s share market retreated sharply as renewed inflation pressures unsettled rate-cut optimism and dampened investor sentiment. The S&P/ASX 200’s 0.96% decline, its steepest in two months, reflects growing caution after CPI rose 1.3% in the September quarter. Persistent price growth, led by electricity and housing, suggests the Reserve Bank may delay further easing. While materials offered support, broader market weakness hints at near-term consolidation. With commodity prices fluctuating and inflation sticky, market participants appear to be recalibrating expectations for policy direction and corporate earnings.

In its latest session, the S&P/ASX 200 Index declined 86.30 points, forming a bearish candlestick pattern accompanied by rising trading volume a combination that signals short-term caution among investors and underscores a prevailing bearish bias. Despite the recent pullback, the index remains below its 21-period Simple Moving Average (SMA), which continues to act as immediate resistance. On the daily chart, a key support level is identified near 8,860, and maintaining price action above this threshold would be crucial for consolidating recent gains and restoring confidence in the broader uptrend. However, on the weekly chart, the index remains positioned above the 21-period SMA, a constructive longer-term signal that suggests the potential for sustained upward momentum once near-term selling pressure subsides.