The S&P/ASX 200 Index (ASX: XJO) is pushing higher on Wednesday after a fresh inflation update gave investors something to work with.
At the time of writing, the benchmark index is up 0.21% to 8,675 points.
The move isn't huge, but it's notable given the market was under pressure earlier in the session.
The ASX 200 traded as low as 8,625.8 points before recovering after the April inflation numbers landed.
The index is still down 0.44% in 2026 and around 1.26% over the past month. Over the past year, however, it remains up about 3.19%.
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Inflation gives investors a reason to buy
The Australian Bureau of Statistics (ABS) said annual inflation eased to 4.2% in April, down from 4.6% in March. The fall was helped by lower automotive fuel prices, which dropped 7% over the month after the federal fuel excise cut.
That was enough to settle some nerves after a weaker start to the session.
Lower headline inflation can reduce pressure on the Reserve Bank of Australia (RBA) to keep lifting interest rates.
It also helps explain why investors were more willing to buy stocks after the data was released.
But the report wasn't all good news.
Trimmed mean inflation, which strips out some volatile price moves, rose to 3.4% over the year. That was up from 3.3% in March and remains above the RBA's 2% to 3% target band.
Why the RBA question is not settled
Today's inflation update may reduce the chance of another rate rise in June, but it doesn't close the door on more tightening later this year.
The RBA has already lifted the cash rate 3 times this year, taking the cash rate target to 4.35%.
That is already putting pressure on households, especially mortgage holders rolling onto higher repayments.
The problem for the RBA is that the headline inflation number is only one part of the picture.
Annual inflation has eased, but the underlying measure is still moving the wrong way.
It also explains why the market reaction has been positive, but not overly excited.
Investors have enough in the numbers to justify some buying today. They do not have enough to assume the inflation fight is finished.
Banks weigh while tech helps
The recovery has not been spread evenly across the market.
The major banks are still dragging on the index, with Commonwealth Bank of Australia (ASX: CBA) shedding 0.60% to $163.32, Westpac Banking Corp (ASX: WBC) down 1.46% to $36.08, National Australia Bank Ltd(ASX: NAB) slipping 1% to $37.23, and ANZ Group Holdings Ltd (ASX: ANZ) edging 0.98% lower to $35.31.
Tech shares are doing more of the heavy lifting.
Dicker Data Ltd (ASX: DDR) is surging 7.86% to $9.61, Megaport Ltd (ASX: MP1) is climbing 7% to $14.75, and Siteminder Ltd (ASX: SDR) is up 6.5% to $3.04.
