The share market is weaker as investors seem to interpret Australia’s latest inflation data as reducing the chances of a May interest rate cut.

Underlying inflation, which strips out the effects of volatile price movements, indicated an annual rate of 2.35 per cent which is well within the Reserve Bank’s target range.

That caused the Australian dollar to bounce almost half a US cent to 77.60 US cents and the sharemarket to slump from flat to 0.80 per cent lower.

Quay Equities head of trading Tristan K’Nell said the fact that inflation was not very low, the release of positive jobs figures last week and the looming federal budget, due after the May RBA decision, were influencing investors.

“There will be an interest rate cut, but from today’s data the RBA might take a bit of a conservative view and hold in May,” he told AAP.

BHP Billiton shares fell after it lifted full year iron ore guidance by two per cent to 250 million tonnes, although Mr K’Nell said he thought that was profit taking and Wednesday’s production numbers were solid.

BHP had shed 52 cents to $30.08, Rio Tinto was down 94 cents to $54.56 while iron ore player Fortescue was 1.5 cents lower at $1.855.

Energy stocks fell as oil prices slid, with Woodside down 19 cents to $34.50 while Santos lost 17.5 cents to $7.705.

Commonwealth Bank was 97 cents down at $90.81 after opening with gains.

National Australian Bank lost 63 cents to $37.95, ANZ was down 54 cents at $35.22 and Westpac dropped 69 cents at $38.10.

KEY FACTS

* At 1225 AEST on Wednesday, the benchmark S&P/ASX200 index was down 48 points, or 0.82 per cent, at 5,824.3.

* The broader All Ordinaries index was down 43.2 point, or 0.74 per cent, at 5,800.8.

* The June share price index futures contract was 60 points lower at 5,817, with 15,113 contracts traded.

* National turnover was 691 million securities worth $1.8 billion.