FX.co ★ ASX 200 Slips as CPI Tempers Rate Cut Bets

The S&P/ASX 200 declined by 0.9%, closing at 8,765 on Wednesday. This marks the end of a three-session rally, spurred by a larger-than-anticipated rise in consumer prices for August. This development led markets to reassess the likelihood of imminent rate cuts. The latest data show headline inflation increasing at the fastest rate seen in a year, even though core inflation has eased, indicating a complex inflationary scenario. These figures bolster expectations that the Reserve Bank of Australia may maintain interest rates at 3.6% during their September meeting. Meanwhile, the probability of a rate cut in November has decreased from 70% to 50% following this data release. Additional downward pressure came from the weak performance of Wall Street, after Federal Reserve Chair Jerome Powell stressed the importance of balancing inflation risks with a slowing labor market. On the corporate side, financial institutions sensitive to interest rates suffered the heaviest losses, dropping by 1.8% to reach a three-week low. Notably, the "Big Four" banks declined between 1.4% and 3.2%. Technology and healthcare sectors also saw impacts, with companies like Wisetech dropping by 2.1% and Telix by 5.2%.