Australian shares end lower as US CPI clouds Fed rate-cut hopes

Australian shares fell on Wednesday, led by banks and mining companies, after the latest U.S. inflation data indicated tariffs may be pushing prices higher, dampening hopes for near-term rate cuts by the Federal Reserve.

The S&P/ASX 200 index XJO ended the day 0.8% lower at 8561.8. The benchmark had ended 0.7% higher on Tuesday, notching a record close.

U.S. consumer prices rose in June at their fastest pace in five months, data showed on Tuesday, signalling that President Donald Trump's intensifying import tariffs were starting to hit households and could put the Federal Reserve on the back foot.

The rate-sensitive financials sub-index XFJ declined more than 1% to its lowest in over three weeks. Top lenders Commonwealth Bank of Australia CBA and National Australia Bank NAB lost over 1% and 3%, respectively.

"June CPI feels like a belated alarm bell...trickling into the local market, hitting rate-sensitive names and growth stocks. For the RBA, it only strengthens the case for wait-and-see, especially with the tariff turmoil," said Hebe Chen, market analyst at Vantage Markets.

The financial sector has come under pressure amid tariff-related uncertainty and shifting rate expectations, weighing particularly on CBA, which had been trading at a premium to the benchmark.

ASX-listed shares of gold mining giant Newmont Corporation NEM fell 5.7% on Tuesday after its finance chief resigned, making it the biggest drag on the mining sub-index XXMM, which slipped 1%.

Diversified miner South32 S32 was also among the top losers, falling 3%, after UBS cut its price target on concerns over its Mozal aluminium smelter.

Global iron ore miner Rio Tinto RIO reported its strongest second-quarter output since 2018 earlier in the day after announcing Simon Trott as its CEO after market hours on Tuesday.

Its shares were in the red much of the session before ending slightly higher.

New Zealand's benchmark S&P/NZX 50 index NZ50G ended the day 0.5% higher at 12,754.59 points.