Miners Drive ASX Higher as RBA Flags Mounting Inflation Risks

Australian equities advanced on Friday, lifted by mining stocks as stronger commodity prices offset caution over the interest-rate outlook. The S&P/ASX 200 index gained 0.3% to 8,760.6 points in early trade, extending its winning run to a third session and putting it on course for its strongest week in three with a gain of about 0.2%.

The rally came as Reserve Bank of Australia Governor Michele Bullock cautioned that inflationary pressures were building, pointing to the Middle East conflict and the artificial intelligence boom as forces pushing prices upward. Her remarks followed July inflation data that came in hotter than expected, reinforcing expectations that the central bank may need to tighten policy further after already raising borrowing costs by 75 basis points this year.

UBS expects the RBA to lift the cash rate by 25 basis points at both its September and November meetings, citing the AI investment surge, rising oil prices and an increasingly hawkish stance among global central banks. Market pricing implies a 92% probability that the RBA will raise its 4.35% cash rate by a quarter point at its next meeting on September 29.

On the bourse, miners climbed 1.6% as iron ore and copper prices firmed on pre-holiday restocking in China. BHP and Rio Tinto each rose about 0.8%. Despite the day's gains, the mining sub-index was down 0.8% for the week, its third consecutive weekly decline.

Gold miners stood out with a 3.2% jump, their best single-day performance in a month, supported by a strong bullion price. Evolution Mining added 2.8% and Northern Star Resources gained 2.2%.

Technology stocks rose 0.6%, heading for their best day in two weeks after a tech-led rally on Wall Street. Megaport advanced about 2.1% and Codan added 2.7%.

Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index edged up 0.1% to 13,767.51 points.