ASX bludgeoned by ‘literal kryptonite’ inflation numbers

Hot inflation data has the sharemarket doubling its odds of a September rate hike, snapping a two-day win streak.

The ASX 200 turned tepid shortly after inflation data was released, with seven of 11 sectors finishing in the red.

Consumer staples had another strong day, but the ASX200 shed 36.8 points, down 0.4 per cent to 9127.8. The All Ords lost 0.39 per cent, while the tech index tanked two per cent.

The inflation figures buoyed the Aussie dollar about 0.3 per cent against the greenback to US71.8 cents.

After the inflation data was released, the ASX 200 quickly retreated from its flirtation with a record-high.

Money markets doubled their bets to 33 per cent on a September hike, and a Melbourne Cup day hike is looking like a certainty.

“A hawkish repricing like the one seen today is quite literally kryptonite to an interest-rate sensitive index like the ASX200,” IG analyst Tony Sycamore said.

“What makes it worse is that the next potential RBA rate hike is lining up for the same day and time as the ‘race that stops the nation’, the Melbourne Cup.”

KPMG chief economist Brendan Rynne said inflation alarm bells were ringing.

“The breadth of the high inflation appears to be nearly all pervasive across the economy, with only one area being transport recording annual inflation less than the RBA’s 2.5 per cent target rate,” Dr Rynne said.

“Today’s data supports the view that without policy action we may be in for a long, costly grind to get inflation under control and the Reserve Bank may have missed an opportunity at the last board meeting to get ahead of the game by raising rates.”

Tech stocks were pummeled under a costly grindstone on Wednesday — 16 of the 20 largest firms finished in the red.

Xero fell 5.7 per cent, Data#3 holders cashed out after a booming start to the week, Siteminder lost 8.5 per cent and athlete data firm Catapult Sports pinged a hammy and fell 4.7 per cent.

EToro analyst Josh Gilbert said WiseTech’s “decent” financial results were “not strong enough to clear the regulatory cloud that has hung over the business for the last year”.