Australian shares ended higher on Tuesday, supported by heavyweight banking stocks, ahead of key U.S. inflation data due later in the day that will give investors hints about the Federal Reserve’s pace of future interest rate hikes.
The S&P/ASX 200 index jumped 0.3% to 7,203.30 at the close of trade. The benchmark ended 0.5% lower on Monday.
Investors will be keeping a close eye on the U.S. consumer price index (CPI) data for November due later today, with core CPI expected to slow to 6.1% from 6.3% and headline inflation dropping to 7.3%.
Azeem Sheriff, a market analyst at CMC Markets, said continuous or consecutive data points are needed to suggest that inflation is meaningfully coming down and not fluctuating.
“We are past the peak (of inflation), that’s pretty much certain,” added Sheriff.
The Fed is widely expected to hike rates by 50 basis points at its final meeting of this year on Dec 13-14.
The Reserve Bank of Australia (RBA) has raised rates by 300 basis points so far this year, taking the key cash rate to a decade-high of 3.1%, with analysts split on whether rates will reach 3.35% or 3.6% depending on the RBA’s moves at its meetings in February and March.