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Highlights
Australian inflation data softens, easing pressure on central bank policy
Banking stocks climb, reversing earlier ASX 200 losses
Resource and gold stocks drag amid muted commodity sentiment
The Australian share market, represented by the ASX 200, regained footing after a volatile trading session, as soft May inflation data led financials to outperform. Despite early weakness, gains in major banks helped the benchmark close marginally in the green, offsetting a sharp pullback in mining and gold-related names.
Cooling consumer price growth provided a sentiment boost for rate-sensitive sectors, especially financial services. This shift in inflation dynamics also reinforced expectations of a more accommodative stance from the central bank in the near term.
Banking Stocks Lead Late-Session Turnaround
The spotlight remained on major banking groups, including the likes of Commonwealth Bank of Australia (ASX:CBA), National Australia Bank (ASX:NAB), Westpac Banking Corporation (ASX:WBC), and Australia and New Zealand Banking Group (ASX:ANZ). Gains across these tickers helped lift the broader financials segment.
Investor sentiment around the banking sector benefited from declining inflationary pressures, which in turn suggest greater household purchasing power and eased funding costs. The ASX 100 index reflected this strength in its financials-heavy composition.
Resource Stocks Reverse as Gold Miners Face Pressure
The day was not uniformly positive. Weakness in the resources sector weighed on broader market performance, with the All Ordinaries index dragged down by declines in companies such as Emerald Resources (ASX:EMR), Pantoro (ASX:PNR), and Perseus Mining (ASX:PRU).
A similar downtrend emerged across Northern Star Resources (ASX:NST) and Capricorn Metals (ASX:CMM), which faced pressure amid softening commodity prices and revised broker expectations. The gold-focused index underperformed, leading the laggards for the day.
Inflation Retreats to Lowest Since Late 2021
Australia’s latest consumer price index figures revealed a substantial easing in headline inflation, falling to levels last seen during pandemic-era policy settings. Trimmed mean measures, often cited by policymakers, also signalled disinflation.
This shift is seen as pivotal in altering the Reserve Bank’s trajectory, reinforcing the likelihood of changes to monetary policy sooner than expected. The data suggested easing household cost pressures, which contributed to the intraday equity rebound.
Small Cap Movers Reflect Broader Market Themes
Among the ASX 300, small caps delivered divergent performance. Standouts included Reedy Lagoon Corporation (ASX:RLC), Ovanti Limited (ASX:OVT), and Astron Corporation (ASX:ATR), which surged on sector-specific developments.
Ovanti appointed a high-profile executive to steer its US expansion plans in the buy now, pay later segment. Meanwhile, Astron progressed regulatory approvals on its rare earths project in Victoria. Reedy Lagoon advanced on new drilling targets at its Burracoppin gold project, supporting broader exploration narratives.
