Australian shares were largely flat on Wednesday, as early gains were countered by subdued mining stocks, domestic inflation data and a sharp fall in Woolworths Group after the supermarket major flagged a slowdown in sales.
The benchmark ASX 200 index ended flat at 7,448.7 points.
Markets were rattled after Australia's core inflation accelerated to a six-year high in the September quarter, fuelling fears that interest rates could be hiked sooner than previously advised by the country's central bank.
"The CPI number has made two- and three-year bond rates go through the roof in terms of the yield, and the market is now starting to adjust to the fact that we will get some rates increases, maybe even towards the back end of 2022," Henry Jennings, senior analyst at the Marcustoday Financial Newsletter said.
The Australian dollar firmed 0.4% after the data release, while short-term bond yields touched their highest since late 2019.
The metals and mining sector was the top decliner on the benchmark, sliding 1.2% on weak iron ore prices.
Global mining majors Rio Tinto and BHP group lost 1.8% and 1.4%, respectively.
Gold stocks also tripped, with Kingsgate Consolidated Ltd losing most with an 11.1% drop.
The heavyweight financial sector closed at its highest level since May 2017.
Three of the "Big Four" lenders were trading up between 0.6% and 1.4% ahead of their earnings release.
Meanwhile, Woolworths' 3.2% decline on warning that lockdown-fuelled sales were slowing also weighed on peer Coles Group, down 1%.
In New Zealand, the benchmark S&P/NZX 50 index closed 0.4% lower at 13,020.26 points, with dairy firms A2 Milk Company Ltd and Synlait Milk Ltd leading losses.
Elsewhere, Japan's Nikkei was down 0.03%, while S&P 500 E-minis futures were up 0.1%.
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