The Australian share market has posted its best performance in nearly seven weeks after a domestic inflation readout was seen as increasing the odds of an end to the Reserve Bank's rate-hiking cycle.
The benchmark S&P/ASX200 index on Wednesday finished up 87.2 points, or 1.21 per cent, to a two-week closing high of 7,293.0, while the broader All Ordinaries gained 90.4 points, or 1.22 per cent, to 7,506.8.
The ASX200 was already in the green after weak US jobs figures released overnight indicated the American labour market was slowing, supporting a quicker end to the Federal Reserve's rate-hiking campaign, and jumped further after the domestic consumer price index readout.
The Australian Bureau of Statistics reported that inflation fell from 5.4 per cent in the year to June to 4.9 per cent in the year to July. Consensus expectations were for 5.2 per cent.
Betashares chief economist David Bassanese said while inflation had failed to fall in the areas of housing, health care and education, overall the figures further cemented the case for the Reserve Bank leaving interest rates unchanged at its policy meeting next week.
"My base case remains that the RBA has now concluded raising interest rates," he wrote.
"It will remain on hold for the remainder of this year with the first interest rate cut now expected in April 2024, with two further rate cuts pencilled in over the remainder of next year."
Other economists - for NAB, JP Morgan and RBC Capital Markets - continued to forecast the RBA would hike rates one final time, likely in November. Nomura's Andrew Ticehurst held that view as well, but said it was now a closer call.
Following the readout, futures markets were pricing in a 99.5 per cent chance that the RBA keeps rates on hold at its meeting next week, and giving just 35 per cent odds of another hike by year-end, according to CommSec.
Separately, the ABS reported on Wednesday that new dwelling approvals dropped significantly last month, on top of another big drop in June, as higher rates, delays and cost escalation spooked buyers.
Eight of the ASX's 11 sectors finished higher, with consumer discretionaries and utilities basically flat and telecommunications down marginally.
Industrials were the biggest gainers, climbing more than two per cent as Brambles rose 6.1 per cent to an all-time high of $15.15 after the global pallet company reported a 15 per cent rise in full-year profit, to $1 billion.
"In a year marked by macroeconomic uncertainty, we are extremely proud of our achievements across all aspects of the business," said chief executive Graham Chipchase.
All of the Big Four banks were higher, led by NAB which climbed 1.6 per cent to $28.85.
ANZ grew 1.0 per cent to $25.04 and CBA and Westpac both rose 0.8 per cent, to $101.84 and $21.72, respectively.
In the heavyweight mining sector, BHP added 1.5 per cent to $44.73, Fortescue climbed 4.5 per cent to $21.42 and Rio Tinto finished 2.1 per cent higher at $111.23.
Flight Centre was 4.0 per cent lower at $21.20 despite the travel agency delivering its first full-year profit since 2019, finally putting the turbulence of COVID-19 behind.
RBC Markets Capital analyst Wei-Weng Chen called the overall results in-line with Flight Centre's guidance, although the details showed overperformance by its leisure business and underperformance by its corporate division.
In currency, the Australian dollar was close to a one-week high against the greenback, buying 64.73 US cents, from 64.43 US cents at Tuesday's ASX's close.
ON THE ASX:
* The S&P/ASX200 index finished Wednesday up 87.2 points, or 1.21 per cent, at 7,297.7.
* The All Ordinaries added 90.4 points, or 1.22 per cent, to 7,506.8.
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 64.75 US cents, from 64.43 US cents at Tuesday's ASX close
* 94.71 Japanese yen, from 94.36 Japanese yen
* 59.55 Euro cents, from 59.59 Euro cents
* 51.22 British pence, from 51.08 pence
* 108.73 NZ cents, unchanged from Tuesday.
