ASX 200 Rises 0.5% to 8,850 as Miners and AI Optimism Lift Australian Shares Ahead of Crucial Inflation Data

Australian shares rose for a second straight session on Tuesday. Mining stocks and a fresh wave of artificial intelligence optimism on Wall Street lifted the market, while investors braced for key inflation figures that could determine whether the central bank raises interest rates next week.

The S&P/ASX 200 index closed up 40.2 points, or 0.46%, at 8,850.1. It built on Monday's late rebound, when the benchmark recovered from an early slide to finish 0.2% higher at 8,809.9.

Wall Street sets the tone

The local market took its lead from a strong overnight session in the United States. The S&P 500 rose 0.7% to 7,676.77 and the Nasdaq Composite gained 0.8%, led by technology and chip stocks.

Two developments drove the U.S. gains. Anthropic, the developer of the Claude AI models, publicly filed for an initial public offering on the Nasdaq. Meta Platforms announced plans to raise up to $95 billion through stock sales to fund its AI build-out.

Renaissance Capital senior strategist Matt Kennedy described Anthropic as the "most highly anticipated IPO of the year."

U.S. stock market volatility also eased. The Cboe Volatility Index, Wall Street's "fear gauge," fell 5.5% to 18.39.

Miners lead gains

Basic materials and energy stocks led the market early in the session, while most other sectors traded lower in the morning.

Gold and resources stocks were among the early standouts. Shares of IperionX, Firefly Metals and PDI Gold were among the top gainers in morning trade. Gold traded around US$4,013 an ounce, up about 0.5%, after falling below US$4,000 last week for the first time in about three months.

Data center operator NextDC rose about 4.5% early in the session. It extended a rebound after a steep sell-off last week, when the company cut its earnings guidance by more than a third.

Iron ore was roughly flat at about US$90.78 a ton, and copper rose about 0.5%.

Banks under pressure

Banks weighed on the market for much of the session.

Bank of Queensland fell about 3.5% in morning trade and was among the biggest decliners. National Australia Bank was also under pressure after broker Morgans said the stock looked fully valued. Morgans kept a "trim" rating with a price target of A$35.67 and cut its earnings forecasts ahead of NAB's full-year results next month.

Payments company Block was among the decliners for a second straight day.

CSL holds annual meeting

Biotech heavyweight CSL held its annual general meeting in Melbourne on Tuesday. It was the company's first AGM since a turbulent period that included a change in chief executive and a sharp share price decline after its full-year results in August.

Investors watched the meeting for any update on trading. CSL also faces a shareholder class action, which the company has said it denies.

Lithium producer PLS Group and retailer Universal Store also held their annual meetings. PLS shares surged more than 8% on Monday after the company completed a US$700 million notes offering and recovered from a recent slide driven by falling lithium prices.

Oil eases on diplomacy

Energy markets remained in focus. Oil prices eased on renewed hopes of de-escalation in the Middle East, after attacks in the Strait of Hormuz earlier this month pushed Brent crude to its highest level in about six months.

Brent was trading around US$115 a barrel and U.S. West Texas Intermediate around US$101.

U.S. President Donald Trump said it was "getting to be decision time" on whether to reach a deal with Iran or "finish it off," keeping investors on edge.

All eyes on inflation

Investors are now focused on Wednesday's release of September and third-quarter consumer price index figures by the Australian Bureau of Statistics, due at 11:30 a.m. AEDT.

The figures are expected to play a major role in the Reserve Bank of Australia's next policy decision, due Tuesday, Nov. 3, which is Melbourne Cup Day. The RBA has raised its cash rate three times this year to 4.60%, and markets were pricing in a better than 60% chance of another increase earlier this week.

Economists expect consumer prices to have risen about 1.3% in the September quarter, for an annual rate of about 3.9%, well above the central bank's 2% to 3% target band.

RBA Governor Michele Bullock is also scheduled to appear before a Senate committee on Wednesday morning. That appearance could offer further clues about the bank's thinking.

RBA chief economist Sarah Hunter said this week that government spending was contributing to inflationary pressure. "Government spending is definitely part of the picture," she said.

Currency and outlook

The Australian dollar traded around 70.16 U.S. cents on Tuesday, slightly weaker than a day earlier.

Global markets face a busy week. The U.S. Federal Reserve announces its interest rate decision on Wednesday, and major U.S. technology companies, including Alphabet, Microsoft, Amazon and Meta, report quarterly earnings. Those results are expected to influence sentiment toward AI-related stocks worldwide, including Australian data center and technology names.

Analysts said a higher-than-expected inflation reading on Wednesday could strengthen the case for an RBA rate hike next week, which would likely weigh on banks, retailers and property stocks. A softer figure could ease pressure on rate-sensitive sectors.

This article is for information only and does not constitute financial advice.