Australian shares edge higher as banks overshadow mining losses

Australian shares inched higher on Thursday, as gains in financials outweighed losses in heavyweight miners, while hot inflation data increased bets for a fifth central bank rate hike this year.

The S&P/ASX 200 index rose 0.2% to 8,868.20 as of 0105 GMT.

The benchmark ended flat on Wednesday. Wednesday data showed higher fuel-cost-driven inflation accelerating in the third quarter, strengthening expectations of a rate hike at the Reserve Bank of Australia’s meeting next week.

RBA Governor Michele Bullock said policymakers will weigh next week whether four rate hikes this year are enough to rein in inflation.

Markets imply nearly nearly 85% chance of a quarter-point rise at the central bank’s November 3 meeting, up from 60% before the data was released.

Rate-sensitive financials rose as much as 1.3%, their highest since August 14.

All the “Big Four” banks climbed between 0.8% and 1.3%.

Insurer Suncorp dropped 2.9%, after it lowered its gross written premium growth forecast for fiscal 2027 to about 3% from a previous outlook range of 3% to 5%.

The stock is headed for its worst session in four weeks. Energy stocks added 1%, tracking higher oil prices on renewed concerns about additional Middle East energy supply disruptions due to continued fighting in Yemen.

Santos and Woodside Energy advanced 0.6% and 1.1%, respectively.

Capping gains, miners dropped 0.5%, with both Rio Tinto and Fortescue sliding over 0.6%.

New Zealand’s benchmark S&P/NZX 50 index rose 0.3% to 13,729.59 points.

The central bank kept the cash rate steady at 2.75% on Wednesday.

The Reserve Bank of New Zealand Governor Anna Breman said chances of a December cash rate hike are “high”, but will depend on the economic outlook and how inflation is evolving.