The Australian sharemarket reversed earlier gains to finish lower on Wednesday after inflation data came in above expectations, increasing the risk of further interest-rate rises by the Reserve Bank of Australia, while a busy local earnings calendar also kept investors cautious.
The S&P/ASX 200 Index fell 36.8 points, or 0.4%, to 9,127.8, with seven of the 11 sectors ending lower.
Annual inflation slowed to 3.5% in July from 3.8% in June, but remained above economists' forecast of 3.3%. The trimmed mean, the RBA's preferred measure of underlying inflation, held at 3.6%.
ANZ commented on the result in a note to clients:
"Following the release of the July CPI data, we now expect the RBA to hike the cash rate 25bp in November.
In the minutes for the August Monetary Policy Board meeting, much of the discussion lingered on upside risks to the RBA’s updated inflation forecasts. In light of today's inflation data, these risks are closer to crystalising.
The data suggest there is strong upside risk to the RBA’s near-term inflation forecast, with a 1.0% q/q trimmed mean inflation in Q3 looking more likely than a 0.9%, albeit with wide margin for error."
The Information Technology sector led declines, with TechnologyOne falling 2% and Xero losing 5.7%.
Logistics software provider WiseTech Global shed 10.1% after reporting full-year net profit after tax of $178.7 million for the 12 months ended 30 June 2026, down 11% from the previous year.
The Energy sector also declined as crude oil prices fell, with Santos losing 1.2%, Woodside Energy down 3.3% and Beach Energy falling 1.7%.
Among companies reporting results, counter-drone defence manufacturer DroneShield led declines, shedding 11% after reporting a statutory loss after tax of $32.2 million for the six months ended 30 June, compared with $2.1 million profit after tax in the previous corresponding period.
Tabcorp rose 0.6% after delivering full-year net profit after tax of $46.3 million for the 12 months ended 30 June 2026, up 26.5% from the previous year.
On the bond markets, 10-year and two-year rates rose 0.6% and 1.8%, respectively, to 5.007% and 4.632%.
