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Posted: 2022-11-10 22:10:28

Australian shares are surging, after weaker-than-expected inflation figures drove the biggest gains on Wall Street in more than two-and-a-half years.

The benchmark ASX 200 index closed up 2.8 per cent at 7,158 points, while the broader All Ordinaries ended 2.9 per cent higher at 7,350.

That has the market value of Australian stocks up by close to $70 billion in a single session.

Almost all sectors of the market were higher, led by surges for industrials, education and discretionary retailers.

Technology stocks also generally performed strongly, following the Nasdaq's lead on Wall Street.

The strongest individual gains were Megaport (13.6 per cent), Pinnacle Investment Management (12.5 per cent), Netwealth (11.7 per cent), payment services provider and Afterpay owner Block (11.5 per cent) and Pro Medicus (11.5 per cent).

Utilities was the only sector trading lower.

Just 15 of the top 200 companies on the market were posting losses, with coal miners Whitehaven (-3.5 per cent) and New Hope (-2.8 per cent) among the worst performers, along with Origin (-3.2 per cent) and Computershare (-2.9 per cent).

CBA commodities analyst Vivek Dhar said there was some caution in commodity prices, despite the general market exuberance due to China's current economic weakness.

"The increase in COVID-19 cases in China and potential for a severe lockdown in the southern city of Guangzhou pose adverse risks to China's commodity demand," he noted.

The Australian dollar also surged dramatically overnight, leaping more than 2 US cents, from just below 64 US cents to just above 66 US cents.

After losing a little ground in the middle of the day, it jumped again later on, climbing to 66.5 US cents by 5:00pm AEDT.

Cooling US inflation drives market frenzy

The dramatic local market moves were a smaller ripple of the wave of buying that swept the US markets overnight, as inflation figures came in weaker than expected.

For the first time in eight months, the Labor Department's data showed the annual Consumer Price Index (CPI) number below 8 per cent.

"This is a big deal," King Lip, chief strategist at Baker Avenue Asset Management in San Francisco, told Reuters.

"We have been calling the peak of inflation for the last couple of months and just have been incredibly frustrated that it hasn't shown up in the data. For the first time, it has actually shown up in the data."

The headline US CPI was 7.7 per cent over the year to October, the smallest increase since January and down from 8.2 per cent in September.

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