Australian shares slumped 1% to a three-week low as April’s CPI unexpectedly accelerated to 3.6% year-on-year, from 3.5% in March, surpassing economists’ expectations of 3.4%. This reinforced expectations that the cash rate won’t be cut soon.

The S&P/ASX 200 dropped 79.2 points to 7687.5, following a 0.3% fall on Tuesday. The All Ords also fell 1%. All 11 sectors declined, led by consumer staples and industrials. Mining giants weakened, with iron ore futures falling 1.2% to $US117.90 a tonne. Fortescue dropped 2.1%, Rio Tinto shed 1.3%, while BHP edged up 0.1% ahead of a potential deal with Anglo American.

Lendlease eased 0.4% after announcing a $4.5 billion plan to focus on Australian operations. Major banks faltered, and insurance giant IAG fell 2.3% due to a class-action lawsuit over home insurance policy discounts.

Data#3 surged 4% after Morgan Stanley upgraded the stock to “overweight” citing AI benefits. The Australian dollar and bond yields rose after the inflation report, with the $A briefly hitting US66.65¢. Traders increased the probability of the Reserve Bank lifting the cash rate to 4.6% this year.

Notable movers included Fisher & Paykel, up 4.7%, and Fonterra, up 4%. Ramelius fell 2.9% amidst a dispute involving Westgold Resources, which rose 7%.