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FIVE at FIVE AU: ASX up today as CPI figures provide hope for rate pause

Published 26/07/2023, 03:55 pm
© Reuters FIVE at FIVE AU: ASX up today as CPI figures provide hope for rate pause
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The S&P/ASX200 was up today, gaining 57.10 points or 0.78% to 7,396.80 and setting a new 100-day high.

Over the last five days, the index has moved up 1.00% and is now 2.26% off its 52-week high.

Materials was the sector most strongly in the green, up 1.86%, followed by Consumer Discretionary (1.01%), Financials (1.00%) and Information Technology (0.99%), while Real Estate, Health Care and Utilities brought up the rear, all down by around a half a per cent.

Australian second-quarter CPI in

The Australian Bureau of Statistics (ABS) released figures this morning that show a significant cooling in inflation data.

Headline inflation fell to 6% year-on-year from 7% last month, while core inflation fell to 5.9% year-on-year from 6.6% previously.

ABS head of prices statistics Michelle Marquardt said: "CPI inflation slowed in the June quarter, with the quarterly rise being the lowest since September 2021.

“While prices continued to rise for most goods and services, there were some offsetting price falls this quarter including for domestic holiday travel and accommodation and automotive fuel.

"June quarter's annual increase of 6% is lower than the 7% annual rise in the March 2023 quarter. This marks the second consecutive quarter of lower annual inflation, also known as 'disinflation', from the peak of 7.8% in the December 2022 quarter."

The RBA meeting minutes for the July Board meeting put the spotlight firmly on the incoming data ahead of the RBA's August Board meeting.

When the board meets in August it will have the benefit of additional data on inflation, household spending, the labour market and the global economy. It will also have an updated set of staff forecasts and a revised assessment of the risks.

With core inflation running below the RBA's forecast of 6%, the RBA can afford to stay on pause in August and possibly beyond.

Before the release, the market assigned a 45% probability of a 25 bp rate hike in August. Those odds have eased back to just 10%.

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