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ASX flat on new inflation narrative

The Australian sharemarket edged lower on Wednesday. Picture: NCA NewsWire / Christian Gilles
The Australian sharemarket edged lower on Wednesday. Picture: NCA NewsWire / Christian Gilles

The Australian sharemarket edged lower on Wednesday, giving up an intraday bounce as investors accepted a “higher for longer” narrative on inflation and interest rates.

The benchmark ASX 200 dipped 0.09 per cent, or 6.9 points, to close at 7605.6 points, while the broader All Ordinaries index fell 0.02 per cent, or 1.3 points, to finish the day at 7861 points.

Technology stocks edged up 0.09 per cent, or 2.5 points, to close at 2941.5.

eToro market analyst Josh Gilbert said Wednesday’s flat trading suggested the market was “settling” after Tuesday’s rout, in which the ASX 200 slumped 1.81 per cent and the All Ords fell 1.84 per cent.

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“We are really starting to see the ‘higher for longer’ narrative play through,” he said after the closing bell on Wednesday.

“(US Federal Reserve chairman) Jerome Powell came out and stated that last night.

“That is one of the reasons we saw that big sell-off from the ASX on Tuesday, essentially wiping out all of the gains for the year.

“We have a market here that is very heavily weighted to those rate-sensitive sectors.”

ASX Generics
The ASX 200 ended slightly down in trading on Wednesday. Picture NCA Newswire/ Gaye Gerard

Overnight on Tuesday, Mr Powell confirmed reserve bankers had become more cautious about the trajectory of inflation in the US.

“More recent data shows solid growth and continued strength in the labour market, but also a lack of further progress so far this year on returning to our two per cent inflation goal,” he said.

A hotter-than-expected retail sales report on Monday and last week’s elevated CPI print has rearranged expectations of rate cuts, leading to falls on Wall Street and the ASX.

“We had such a big sell off on Tuesday, anticipating that this was essentially going to be the case,” Mr Gilbert said.

“The market had been expecting that commentary from Jerome Powell and maybe other central bankers to come, given the data we’ve received.”

On Wednesday, six of 11 industry sectors ended in the red, with energy stocks booking the largest fall with a 0.49 per cent sector-wide decline.

Utilities, discretionary, IT, staples and telecommunications all booked gains, with utilities recording a 2.84 per cent rise.

The big miners recorded a mixed day, with BHP falling 1.18 per cent to settle at $44.44 a share, Fortescue dipping 0.12 per cent to $25 and Rio Tinto flat with a 0.016 per cent rise to $128.72.

The big banks were also mixed, with Commonwealth Bank closing down 0.23 per cent to $111.94 a share and NAB falling 0.63 per cent to $33.15.

Westpac rose 0.12 per cent to $25.58 and ANZ edged up 0.035 per cent to $28.37.

*FILE PIX* Billionaire Gina Rinehart, chairman of Hancock Prospecting Pty, stands for a photograph during a tour of the company's Roy Hill Mine operations under construction in the Pilbara region, Western Australia. Picture: NCA NewsWire / Phil Gostelow
Billionaire Gina Rinehart has taken a 5.82 per cent stake in Lynas Rare Earths. Picture: NCA NewsWire / Phil Gostelow

In corporate news, gold stocks recorded impressive gains, with Evolution Mining jumping 7.49 per cent to $4.16 a share after the release of its March quarterly numbers in which the company reported a 15 per cent increase in gold output and a 7.5 per cent jump increase in cash flow to $85m.

Silver Lake Resources and St Barbara lifted 4.01 per cent to $1.42 and 5.66 per cent to 28c, respectively.

Lynas Rare Earths jumped 5.91 per cent to $6.45 on the news mining magnate Gina Rinehart upped her stake in the company to 5.82 per cent.

The federal government’s critical minerals strategy also sparked a boom in Renascor Resources and Alpha HPA.

Renascor soared 26.51 per cent to 10c after the government announced it would loan the company $185m to develop the Siviour Graphite project in South Australia.

Alpha HPA lifted 6.57 per cent to $1.09 after securing $400m in new government loans to develop a high-purity alumina processing facility in Gladstone, Queensland.

The Aussie dollar gained 0.31 per cent against the greenback to buy US64.2c at the closing bell.