Australian shares inched higher on Thursday, led by gains in commodity and technology stocks, while the US Federal Reserve left interest rates unchanged as widely expected and gave little clues about further reductions in borrowing costs this year.

The S&P/ASX 200 index rose 0.2% to 8,465.5 by 2354 GMT.

The benchmark gained 0.6% on Wednesday as a surprisingly soft inflation report opened the door to a cut in interest rates as early as next month.

“With Aussie inflation nearing the RBA’s target, traders are pricing in a 91% chance of a 0.25% rate cut,” said Jessica Amir, a market strategist at trading platform moomoo.

Fed officials made a unanimous decision to keep the overnight interest rate in the current 4.25%-4.50% range, putting the central bank in a holding pattern as they await further inflation and jobs data and clarity on the impact of President Donald Trump’s policies.

In Sydney, energy stocks rose as much as 1.3%, even after oil prices settled lower overnight.

Sector major Woodside Energy rose as much as 1.3%, while oil and gas explorer Karoon Energy gained 5.3% and was the top gainer on the benchmark index after it reported strong quarterly sales volumes and announced a share buyback programme.

Gold stocks gained as much as 0.6%, even after bullion prices slipped overnight.

Australian shares extend gain as easing inflation opens door to rate cut

Miners climbed as much 0.6%, with BHP Group, Rio Tinto and Fortescue gaining between 0.3% and 0.6%.

Technology stocks rose for a second straight session and were last up 0.4%.

Overnight, the US Dow Jones Industrial Average fell 0.31%, the S&P 500 declined 0.47% and the Nasdaq lost 0.51%.

Among individual stocks, Zip Co fell 19.6% and was on track for its worst session in more than 2-1/2 years after the buy-now-pay-later firm’s second-quarter earnings failed to meet key expectations.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index inched lower by 0.2% to 12,976.13.