ASX 200 Falls 0.78% as CBA Predicts Rate Hike After Hot Inflation Data, Qantas Profit Drops on Fuel Costs

SYDNEY — The S&P/ASX 200 fell 71.6 points, or 0.78%, to 9,056.2 as of 12:59 p.m. AEST Thursday, weighed down by Commonwealth Bank's revised forecast for a further Reserve Bank of Australia interest rate hike and a soft profit result from national carrier Qantas, on what marked the final major session of the current corporate reporting season.

Commonwealth Bank, Australia's largest lender, revised its interest rate outlook Thursday following a higher-than-expected monthly inflation reading released by the Australian Bureau of Statistics the previous day. According to ABC News' live markets coverage, CBA now expects the Reserve Bank to raise interest rates one more time this year, likely in November, as the central bank works to contain persistent inflation pressures. Belinda Allen, CBA's head of Australian economics, explained the bank's revised thinking in a note released Thursday morning. "The November hike would be in response to near-term inflation persistence rather than a materially stronger medium-term growth outlook," Allen wrote. She noted that CBA still expects the broader economy and labour market to weaken enough over the coming year to eventually allow the Reserve Bank to reverse some of that additional policy tightening. "We continue to expect the economy and labour market to moderate sufficiently to allow the RBA to reverse some of the additional restrictiveness in 2027. But the timing remains uncertain," Allen said, adding that she still sees scope for rate cuts in 2027 despite the anticipated near-term hike.

Qantas added to Thursday's downbeat tone with its full-year financial results, reporting a $330 million fall in profit before tax compared with the prior year, according to ABC News. The airline's underlying profit before tax came in at $2.06 billion, while statutory profit after tax fell $316 million to $1.29 billion. Revenue for the year increased 3.4% to $47.27 billion, and earnings before interest and tax rose a more modest 0.6% to $4.49 billion. Qantas attributed much of the profit decline to a substantial rise in fuel costs, though the airline said it had managed to significantly offset that pressure through internal cost-management measures. According to the company's own commentary on the results, "These actions, along with other mitigations, limited the net impact on earnings to $420 million, despite a $610 million increase in our fuel bill."

Thursday's decline builds on a mixed and volatile stretch for Australian equities throughout the current August reporting season, which has been characterized by sharp swings tied to individual company results across nearly every trading day. According to ABC News' coverage of Wednesday's session, the ASX 200 closed higher that day even as banks and insurers dragged on the index, with miners in the materials sector leading gains; BHP rose 3.0%, while Rio Tinto and Fortescue added 1.2% and 1.0% respectively. Health insurer NIB Holdings was the session's weakest performer following its results, while Chorus, Endeavour Group, Aussie Broadband and Reece all sold off after reporting their own earnings that same morning.

Global market sentiment has also weighed on Australian trading this week, with investors closely watching Nvidia's quarterly earnings report and broader technology sector jitters heading into the release. According to Investing.com, Asian stocks broadly fell earlier this week amid deepening tech sector anxiety ahead of the Nvidia results, even as some individual ASX names bucked that trend; Coles gained roughly 2.3% after posting a stronger-than-expected full-year result, while Woodside Energy reported a 7% rise in first-half profit, though its shares fell 1% after the company scrapped its $5 billion clean-energy investment target to refocus on its core oil and gas operations.

Thursday's session caps what has been an extraordinarily busy final stretch of Australia's August corporate reporting period, with companies across the retail, energy, financial, resources and travel sectors all releasing results within the same compressed window, contributing to the kind of sector-by-sector volatility that has characterized ASX trading throughout the month. According to earlier Motley Fool Australia coverage previewing Thursday's session, several significant company results were scheduled for release, adding to the day's overall market-moving news flow alongside the CBA rate revision and Qantas earnings.

The ASX 200 remains well below its all-time high of 9,198.6 points, reached in February 2026, even after recovering substantially from lows closer to 8,800 points recorded in July. According to Motley Fool Australia, the index has delivered a long-term annualized return of roughly 8.2% on a total return basis, including dividends, over its more than 25-year history, a reminder that individual sessions like Thursday's pullback, while notable in the short term, sit within a broader pattern of long-run growth for the benchmark index.

With Commonwealth Bank now anticipating a further Reserve Bank rate increase in November, driven by stubbornly persistent inflation pressures, and the current reporting season winding down after weeks of individual company results driving sharp intraday swings across the market, investors are likely to shift their attention in the coming days toward how the Reserve Bank itself responds to the latest inflation data at its upcoming policy meetings, alongside continued monitoring of global developments including Nvidia's earnings reaction and ongoing geopolitical tensions in the Middle East, both of which have continued to shape sentiment across Australian and broader Asia-Pacific equity markets throughout the week.