ASX Large Caps: Shares higher as Aussie inflation appears to have peaked; crucial Fed speech ahead

• The ASX rose 0.4% on Wednesday
• Australia’s headline inflation in October unexpectedly fell
• Fed Chair Jerome Powell will speak tonight

Shares rose 0.40% on Wednesday as investors react to the softer inflation numbers.

The ABS’ new monthly gauge of Australian CPI released today shows that headline inflation in Australia fell to 6.9% YoY in October.

This is way below market expectations of 7.6% as food prices unexpectedly fell during the month.

“The RBA will be happy to hear that inflation was much lower than expected, even if it does remain historically high,” said Matt Simpson, senior market analyst at City Index.

But Simpson said that we must take into account today’s annual weight adjustment to the CPI basket, and that inflation would have been 7.1% if last year’s methodology was used.

“But even a move down from 7.4% to 7.1% is noteworthy as it leaves the potential that inflation has in fact peaked,” he said.

The RBA will next meet on Tuesday December 6th, and today’s data is expected to be a major input into the central bank’s rates decision.

“So now we’ve seen annualised inflation drop 5 percentage points in a month, the case for RBA to pause in December is becoming stronger for a central bank that really does not want to raise rates any more than they need to,” said Simpson.

Later tonight, investors will also be closely watching Fed Chair Jerome Powell’s speech for any signal of a pivot.

On the ASX today, Coal miners were the main winners while Health and Staples declined.

CSL (ASX:CSL), the biggest company by far on the Health index, fell as low as 2% on no specific news.

Meanwhile, rising oil prices overnight pushed ASX energy stocks higher today amid uncertainty over the Russian price cap.

The EU has discussed setting a cap as low as the $62 level, but no consensus agreement seems to be in place right now.

Shares in real estate stocks also rose as bond yields declined following the inflation report.

Looking ahead to tonight’s session on Wall Street, the US jobless, US GDP, and EU inflation are all due to be released.

BIG CAP WINNERS

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Whitehaven Coal (ASX:WHC) rose 9% as it continued to buy back its shares in the open market. The company had earlier signalled it would buy back a total of $1.9bn.

Judo Capital (ASX:JDO) rose 7% on no specific news.

BIG CAP LOSERS

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The Star Entertainment Group (ASX:SGR) fell 0.4% after AUSTRAC commenced civil penalty proceedings in relation to alleged breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. The claim does not detail the amount of the penalty to be sought by AUSTRAC.