The ASX has used yesterday's losses as a springboard, jumping back over the 8,000-point threshold with a 1.60% or 127.40-point surge to set a new all-time high of 8,080.60 points.
This came as the consumer price index (CPI) rose 1.0% this quarter, and 3.8% over the 12 months preceding.
"The June quarter rise is the same as the 1.0% rise in the March 2024 quarter," ABS head of prices statistics Michelle Marquardt said.
“The annual rise of 3.8% for the June quarter is up from 3.6% in the March quarter. This is the first increase in annual CPI inflation since the December 2022 quarter.”
More on the latest inflation data and whether it will apply rate hike pressure to the RBA in a moment.
The market's strength lifted 10 of 11 sectors. Utilities alone fell 0.14%, while the strongest gains were in Info Tech (+2.53%), Energy (+2.41%) and Real Estate (+2.09%).
Xero Ltd gained 2.79%, WiseTech Global 1.81%, Woodside Energy Ltd 2.72%, Santos 1.79%, Stockland Corporation Ltd gained 3.38% and Scentre Group 2.50%.
Commodities were mostly down. Silver and gold gained more than 1.30% while platinum lifted 0.99%, nickel 1.11% and copper 0.65%.
Lead took the biggest hit, down 2.16% and West Texas also dropped, shedding 0.87% today and 2.86% over the last five trading days.
Best-performing stocks on the ASX200 were Strike Energy Ltd (ASX:STX), up 6.58%, and Coronado Global Resources Inc, up 6.460%.
The index has gained 1.47% over the last five days.
CPI data applies rate hike pressure
Moody’s Analytics economist Murphy Cruise joins us to discuss the most recent consumer price index (CPI) data and whether it will prompt the RBA to hike rates once again.
“Pressure has been mounting on the Reserve Bank of Australia, with many arguing the board’s leash on inflation was too loose. The June quarter inflation print will allay some — but not all — of those concerns,” Cruise writes.
“Underlying inflation, the only inflation measure that matters when price distortions are wreaking havoc on the headline figure, eased to 3.9% y/y in the June quarter from 4% previously.
“While that’s still a long way from where it needs to be, progress is being made.
“The RBA is reluctant to hike. At the last two monetary policy meetings, the board laid out convincing cases to push rates higher. Ultimately, they held off pulling the trigger, arguing rates were high enough to break the back of inflation.
“June’s inflation print gives more credence to that argument. While that will be enough for the board to hold off hiking in August, rate cuts won’t be on the cards for some time yet. We expect the RBA to keep rates at 4.35% until February next year.
“While there is enough good news in the June inflation print to keep the RBA from hiking, there are still plenty of pockets suggesting inflation is becoming harder to quell.
“Goods inflation ticked up for the first time since the September quarter of 2022, while services inflation rose for the first time since the middle of last year.
“On top of that, rental growth is soaring and insurance premiums are rocketing. What’s tricky for the Reserve Bank of Australia is that they have next to no control over these prices; rate hikes won’t prompt insurers to cut premiums, nor will they lower rent and dwelling construction costs.
“Stripping out housing and insurance, inflation is just a smidge above the top of the RBA’s 2%-3% target band. Still, an uptick in the most recent data highlights the risk of inflation’s breadth widening.
“Key to that risk is the host of new tax cuts and cost-of-living supports that started flowing on July 1. The supports are a double-edged sword; while they ease pressures on households, the scale and scope of the measures will be an additional handbrake on disinflation—making the RBA’s job harder.
“Already, we’ve seen consumer confidence jump as tax cuts hit bank accounts. If that exuberance converts to spending, the RBA may be forced into action.
“We see those measures keeping inflation elevated this year, ending 2024 at 3.5%.
“From there, gradual improvement will see inflation sneak into the top of the RBA’s target band by the middle of next year and return to 2.5% in 2026.”
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