Australian shares dip after Q3 inflation points to RBA rate hold next week

Australian shares dipped on Wednesday as banks extended losses and real estate stocks reversed course, while local investors sharply pared back bets of a rate cut by the central bank next week after third-quarter inflation came in higher than expected.

The S&P/ASX 200 index pulled back 0.6% to 8,958.50 points by 0047 GMT, falling below the key psychological 9,000-point level.

The benchmark was largely unchanged in early trade.

The Australian Bureau of Statistics’ consumer price index (CPI) rose 1.3% in the third quarter, topping forecasts of a 1.1% increase as housing and travel costs climbed.

Markets significantly lowered odds of policy easing after the data was released, with investors now pricing in a nearly 90% chance of a hold on the 3.60% cash rate by the Reserve Bank of Australia.

The RBA is set to decide on the interest rate next week on November 4.

On the local bourse, banks extended losses to a decline of 1.1%, with the “Big Four” banks down between 0.6% and 1.7%.

Real estate stocks reversed earlier gains to fall 0.8%, dragged by a 2% fall in peer Stockland Corporation.

Healthcare stocks fell 2.6%, dragged for a second consecutive day by a 4.8% fall in CSL’s shares after the firm announced delays to the US spinoff of its Seqirus vaccine division on Tuesday.

Miners, however, gained 0.9% as iron ore prices strengthened following China’s recent proposal of rules placing limitations on steelmaking capacity. Mining giant BHP rose 0.7%.

Among company news, grocer Woolworths’ shares reversed earlier losses to rise 1.6% after the firm posted a rise in its first-quarter sales, beating market expectations.

Meanwhile, New Zealand’s benchmark S&P/NZX 50 index rose 0.4% to 13,462.37 points.