Australian shares rise as RBA governor warns inflation risks materialising

Australian shares climbed on Friday, buoyed by mining stocks riding stronger commodity prices, while the central bank governor warned inflation risks were materialising and traders held onto bets of further tightening later this month.

The S&P/ASX 200 index rose 0.3% to 8760.6 points as of 0002 GMT, extending gains to a third session.

It was on track for its best week in three with a rise of around 0.2%.

The Reserve Bank of Australia’s Governor Michele Bullock said that the Middle East conflict and the AI boom were putting upward pressure on prices.

July inflation came in hotter than anticipated, raising the prospect of more RBA rate hikes after it had already lifted borrowing costs by 75 basis points this year.

UBS expects the RBA to raise the cash rate by 25 basis points in both September and November, pointing to the AI investment boom, surging oil prices, and global central banks’ increasingly hawkish response to inflation as the main drivers.

Markets imply a 92% chance the RBA will lift its 4.35% cash rate by 25 basis points at its next meeting on September 29.

On the bourse, miners advanced 1.6%, as iron ore and copper prices gained ground on Chinese pre-holiday restocking.

However, the sub-index fell 0.8% for the week, marking a third straight week of losses. BHP and Rio Tinto were up about 0.8% each.

Gold miners strengthened 3.2%, marking their best day in a month on strong bullion.

Top players Evolution Mining gained 2.8% while Northern Star Resources added 2.2%.

Technology stocks were up 0.6%, heading for the best day in two weeks after a tech-led rally on Wall Street.

Megaport rose around 2.1%, while Codan added 2.7%.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index added 0.1% to 13,767.51 points.