The Australian sharemarket has moved higher after new figures showed inflation cooled to 2.4 per cent in the year to December.
The Australian sharemarket has moved higher after new figures showed inflation cooled to 2.4 per cent in the year to December.
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By Hannah Kennelly
Updated January 29, 2025 — 11.11amfirst published at 4.13am
The Australian sharemarket has moved higher after new figures showed inflation cooled to 2.4 per cent in the year to December, opening the door for the Reserve Bank to deliver an interest rate cut next month.
The ASX 200 had risen by 60.10 points, or 0.7 per cent, to 8459.20 points shortly before midday on Wednesday, after the Australian Bureau of Statistics said the consumer price index rose by 0.2 per cent in the December quarter. This took the annual rate to 2.4 per cent, down from 2.8 per cent in the 12 months to the end of September – the lowest inflation result since the March quarter of 2021.
The closely-watched measure of underlying inflation rose by 0.5 per cent in the quarter, the lowest rate since mid-2021. The annual underlying inflation rate dropped to 3.2 per cent.
The ASX 200 index had been 0.4 per cent higher earlier in the morning, before the ABS figures were released, and the inflation figures are likely to bolster predictions of an RBA rate cut in February.
The benchmark dipped 0.1 per cent on Tuesday, after a mixed day of trading which was dominated by the emergence of Chinese artificial-intelligence startup DeepSeek, which triggered a carnage for tech stocks on Wall Street on Monday.
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The Australian dollar traded flat and was valued at US62.53¢ as of 10.40am AEDT.
Information technology was one of the best-performing sectors in early trading, with WiseTech Global up nearly 3.4 per cent and Xero up 2.6 per cent. Real estate was also in the green, with data centre owner Goodman Group – one of the biggest losers in the previous trading session – up 1.3 per cent and shopping centre owners Scentre, Vicinity and Stockland climbing 0.7 per cent, 0.9 per cent and 1.3 per cent, respectively.
Energy stocks were also having a strong morning after Tuesday’s losses, buoyed by gains in Woodside Energy (up 1.4 per cent), Ampol (up 0.5 per cent) and Yancoal (up 0.5 per cent). The big banks were mixed, with CBA, Westpac and ANZ all up 0.3 per cent, however NAB traded flat. Miners were in the red with heavyweights BHP and Rio Tinto down 1.1 per cent and 1 per cent, respectively.
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Meanwhile, shares in embattled casino operator Star Entertainment were up 10.4 per cent after the cash-strapped company announced it’s selling several Sydney assets, including its Star Sydney Event Centre, for $60 million to Foundation Theatres.
In an ASX statement, Star CEO Steve McCann said management “had worked closely with the team at Foundation Theatres since they acquired the sublease for the Sydney Lyric in 2011”.
“We continue to work on a number of other potential non-core asset transactions,” he added.
In the US, the spotlight remained on Nvidia, whose chips are powering much of the move into AI and whose stock has become a symbol of the surrounding frenzy. It rose 8.8 per cent after plunging nearly 17 per cent the day before, which was its worst drop since the 2020 COVID crash.
Other AI-related companies also held steadier, including chip company Broadcom, which rose 2.6 per cent. Constellation Energy picked up 1.4 per cent after plummeting nearly 21 per cent on Monday. It had earlier rallied on expectations it will help supply the electricity that vast AI data centres would gobble up.
Such revenues are threatened after DeepSeek said it was able to develop a large language model that can perform as well as big US rivals, but at a fraction of the cost. That raises questions about whether all the spending expected for AI chips and electricity will need to happen.
AI-related stocks have been Wall Street’s biggest stars in recent years, soaring on expectations that big spending will only continue to grow. The gains, though, also created criticism that their stock prices had simply gone too high, too fast.
It’s still uncertain how much DeepSeek’s development will upend the AI industry. While it could mean less growth in spending than expected for data centres, electricity and chips, it could also boost other areas.
“If AI becomes less expensive to use, we think businesses will adopt it more quickly, making a greater investment in AI software,” according to James Egelhof, chief US economist at BNP Paribas. “We think this acceleration in adoption could mean a rise in software investment that offsets – or even dwarfs – any deceleration in spending on data centre structures, hardware and related investment.”
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Outside of AI-related industries, stocks held up fairly well on Monday on Wall Street, and they were mixed on Tuesday following a set of mixed profit reports.
Cruise operator Royal Caribbean steamed 12 per cent higher after it topped analysts’ profit expectations for the end of 2024. It benefited from stronger-than-expected demand from customers booking trips closer to the time of departure. The company also gave a profit forecast for the first three months of 2025 that beat analysts’ expectations.
JetBlue Airways, meanwhile, lost a quarter of its value, 25.7 per cent, despite reporting a milder loss for the latest quarter than analysts expected. The company expects its costs outside of fuel to rise more quickly at the start of 2025 than a key underlying measure of its revenue.
Later this week will come profit reports from some of Wall Street’s most influential companies, including Apple, Meta Platforms, Microsoft and Tesla.
with AP
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Hannah Kennelly is a reporter at The Age. She previously worked as a regional journalist for The Mansfield Courier.
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