Australian Stocks Rebound After Inflation Data Disappoints

Australian stocks made early gains but quickly erased them after July inflation data came in hotter than expected.

The S&P/ASX 200 opened up about 0.6% but was back to flat within a few hours, as markets digested the Australian Bureau of Statistics' consumer price index (CPI) data showing prices rose more than forecast in July.

Fuel and travel helped push the headline number up, and 'core' inflation, which strips out the most volatile items, also surprised on the upside. This mix can keep central banks on alert, potentially leading to another Reserve Bank of Australia (RBA) rate hike.

Swaps markets reacted quickly, with implied odds of the RBA holding its cash rate at 4.35% dropping from better-than-80% to just over 60%. This shift explains the split within the market: miners climbed to records as copper prices stayed firm, while more rate-sensitive sectors like financials struggled.