The S&P/ASX200 fell 86.3 points on Wednesday, down 0.96 per cent, to 8,926.2, as the broader All Ordinaries lost 77 points, or 0.83 per cent, to 9,218.8.
The bourse tumbled from an already shaky start after higher-than-expected September quarter trimmed mean inflation figures landed at the upper limit of the Reserve Bank's two-to-three per cent target range.
"It pretty much eradicates almost any chance of a rate cut before the end of the year, it would take something extraordinary to see it now," Capital.com market analyst Kyle Rodda told AAP.
Hopes of a reduction rose earlier in the month after September unemployment spiked to 4.5 per cent, but now the dangerous combination of a softening economy and sticky inflation puts the RBA on a tricky path ahead for its monetary policy decisions.
"We are getting weakness coming through the labour market at the same time prices are moving higher in aggregate and that is a - dare I say it - stagflationary mix," Mr Rodda said.
"They wouldn't want to jump the gun with that sort of rhetoric, but nevertheless, that's the basic formula."
Interest rate-sensitive sectors dragged on the bourse, as the heavyweight financial sector dropped 1.9 per cent, tracking with losses in the major banks.
The inflation figures also weighed on industrials (-2.0 per cent), real estate stocks (-1.7 per cent) and the discretionary spending segment, down 1.1 per cent, as Wefarmers, JB Hi-Fi and Aristocrat finished lower.
The traditionally defensive consumer staples sector rose 0.3 per cent, thanks largely to a more than two per cent rally in Woolworths shares to $27.61 after a strong quarterly sales report.Â
The supermarket giant's price is on par with mid-2019 and more than 35 per cent short of its 2021 record-high of $42.66. Group CEO Amanda Bardwell told shareholders on Wednesday the first quarter performance was "below our aspirations and there remains more to do".
Raw materials staged a modest comeback after a brutal sell-down on Tuesday, led by strength in large cap miners as iron ore prices pipped two-week highs, and as dip-buyers supported gold stocks.
Spot gold is trading at $US3,957 ($A5,997) an ounce, still in correction territory at around 10.7 per cent short of the previous week's $US4,381 all-time high.
Copper miners performed well as the base metal rose to its highest price since late July, helping Sandfire Resources and Capstone Copper Corporation rally more than three per cent each.
The energy sector gained 0.5 per cent, as strong performances in coal producers and uranium plays helped counterbalance an overnight dip in oil prices.
Woodside shares edged down 0.4 per cent to $24.16 while Santos edged 0.1 per cent higher as natural gas futures bounced after a week of production-led price pressure.
Health care stocks continued to underperform the broader market, down 2.3 per cent, as CSL and imaging IT provider Pro Medicus tumbled up to 4.4 per cent.
The Australian dollar strengthened on the inflation print to buy 66.01 US cents, up from 65.38 US cents and trading at three-week highs after a fifth session of gains.
ON THE ASX:
* The S&P/ASX200 fell 86.3 points, or 0.96 per cent, to 8,926.2
* The broader All Ordinaries lost 77 points, or 0.83 per cent, to 9,218.8
CURRENCY SNAPSHOT:
One Australian dollar trades for:
* 66.01 US cents, from 65.56 US cents on Tuesday
* 100.59 Japanese yen, from 99.61 Japanese yen
* 56.76 euro cents, from 56.21 euro cents
* 49.87 British pence, from 49.07 British pence
* 114.16 NZ cents, from 113.47 NZ cents
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