Australian Shares Steady Ahead of Key Inflation Data

Australian shares remained largely flat on Tuesday as gains in mining and gold stocks were offset by losses in the banking sector. Investors are cautious ahead of the upcoming domestic inflation data release.

The S&P/ASX 200 index was stable at 7,785.10 by 0102 GMT, following a 0.8% rise on Monday. Investors are awaiting April’s consumer price inflation data, scheduled for release on Wednesday, which is expected to provide more insight into the Reserve Bank of Australia’s (RBA) future interest rate decisions.

A Reuters poll of economists forecasts a slight decrease in the Consumer Price Index (CPI) to 3.4% from 3.5% in March. Last week, the RBA held interest rates steady to avoid “excessively fine-tuning” policy but indicated a rate hike might be necessary if inflation forecasts are too optimistic.

Westpac analysts noted that the CPI reading is heavily influenced by the goods component, which has shown a disinflationary trend. An unexpected rise in this area could increase speculation about potential RBA rate hikes.

Mining stocks rose 0.5%, with BHP Group, the world’s largest listed miner, up nearly 0.6%. The gold sub-index advanced 0.9% in early trade, following a 1% increase in gold prices on Monday due to reduced expectations of U.S. rate cuts.

However, financial stocks, which are sensitive to interest rate changes, fell 0.2%. Commonwealth Bank of Australia and Westpac dropped 0.1% and 0.2%, respectively. The other two major banks were largely flat.

Healthcare stocks declined by 0.4%, and the technology sub-index fell 0.3%.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index edged up slightly to 11,763.89. The New Zealand government is set to release its budget on Thursday, with an expected increase in the fiscal deficit.

As investors await key economic indicators, the market remains cautious, balancing gains in resource sectors against pressures in financial and other sectors.