Australian shares closed marginally higher on Wednesday as investors took on a cautious stance after higher-than-expected core inflation in May kept bets on further policy tightening still on the table.
The S&P/ASX 200 index ended 0.2% higher at 8,808.40 points. The benchmark had closed 0.3% lower on Tuesday.
Data showed headline inflation cooled to 4% in May from 4.2%, below economist forecasts for 4.3%. However, core inflation increased by 0.4% in May, above forecasts for 0.3%, pushing the annual pace up to 3.6%, well above the target band of 2% to 3%.
"Ultimately this latest set of inflation data doesn't remove the risk of another hike, with core inflation still tracking higher," said Tim Waterer, chief market analyst at KCM Trade.
Last week, the central bank had warned it might hike the key rates again if needed to rein in persistently sticky inflation, as it stood pat on its rates.
"Overall, the market appears to be consolidating after recent volatility rather than committing to a clear direction," Waterer said.
Technology stocks jumped as much as 5.2%, marking their steepest intraday rise since June 1, as bargain hunters lined up to scoop up battered stocks after the sub-index shed over 8% over the last two sessions.
WiseTech Global advanced as much as 18.6% and Xero added 8.2%.
Rate-sensitive financials rose 0.3%, with three of the "Big Four" lenders trading in the green.
Health stocks further lent support to the benchmark, rising 2.1%. CSL, once Australia's priciest stock, gained 2.6%.
The broader mining sub-index and gold stocks fell 0.7% and 2.7%, respectively, on the back of weaker underlying commodity prices.
Market participants now await May employment data, due on Thursday.
New Zealand's benchmark S&P/NZX 50 index fell 0.3% to 13,400.66 points.
