FX.co ★ Australian Stocks Subdued as RBA Flags Inflation Threats

Australian equities edged lower on Thursday, with the benchmark hovering near 8,524 after two consecutive sessions of gains, as investors weighed fresh caution from the central bank. The RBA warned that a global supply shock stemming from the war in Iran could push inflation and long-term inflation expectations higher, particularly given ongoing capacity constraints in the economy. Assistant Governor Chris Kent said the board would continue to carefully balance competing forces in setting monetary policy.

On the data front, Australia’s headline CPI eased to 3.7% in February from 3.8% previously, while the trimmed mean CPI declined to 3.3%, undershooting forecasts and down from 3.4% in January. Losses in the equity market were partly offset by a positive lead from Wall Street on Wednesday, as hopes grew for progress toward resolving the conflict.

Sector-wise, consumer durables, non-durables, and commercial services underperformed, while gains in logistics, process industries, and energy minerals helped limit the downside. Early notable decliners included PLS Group (-2.7%), Aristocrat Leisure (-1.7%), NAB (-1.0%), and Sigma Healthcare (-1.1%).