The S&P/ASX 200 gained 57.80 points (0.69%) to 8,456.90 today (January 29th, 2025), driven by strong performances across multiple sectors (as of 3:41 pm AEDT). The top-performing stocks were The Star Entertainment Group Limited and Bellevue Gold Limited, which rose above 17.% and 8%, respectively.
The index has gained 0.32% over the past five days and is now 0.68% below its 52-week high. Investor sentiment has improved, fuelled by positive inflation data and expectations of lower interest rates.
Inflation Trends in Australia
The ASX 200 rallied after the Australian Bureau of Statistics (ABS) revealed that the Consumer Price Index (CPI) increased by 0.2% in the December quarter and 2.4% annually.
Commenting on the inflation figures, Michelle Marquardt, ABS head of prices statistics, said:
“December quarter’s rise was the same as the 0.2% increase in the September 2024 quarter.”
She noted that both increases were the lowest recorded since the June 2020 quarter, when the CPI declined during the COVID-19 pandemic due to free childcare.
In a positive sign for lower interest rates, she added:
“Annually, the December quarter’s rise of 2.4% was down from 2.8% in the September quarter.”
Trimmed Mean Inflation Falls
The trimmed mean inflation, which removes volatile price swings and is the Reserve Bank of Australia’s (RBA) preferred measure for interest rate decisions, fell to 3.2% in the December quarter from 3.6% in September.
Marquardt explained:
“The trimmed mean excluded price falls in both Electricity and Automotive fuel this quarter, alongside other large price rises and falls. As a result, trimmed mean annual inflation of 3.2% was higher than CPI inflation of 2.4%.”
Why Are ASX 200 Investors Celebrating?
Investors have been waiting for inflation to return to the RBA’s 2–3% target range so that interest rates can decline.
Currently, Australia’s official cash rate remains at 4.35%, with the RBA set to meet next month. While a February rate cut is uncertain, today’s inflation figures increase the chances of monetary easing sooner rather than later.
Economists had expected trimmed mean inflation to fall to 3.3%, but it came in lower at 3.2%. This could prompt the RBA to consider a rate cut in the coming months.
However, analysts warn that some factors could delay the central bank’s first rate cut:
- A weak Australian dollar may worsen with lower interest rates.
- Public service job growth could complicate economic conditions, as government-driven employment expansion may counteract the RBA’s monetary policy goals.
According to Josh Gilbert, market analyst at eToro, these factors could push the first rate cut into late 2025.
Sector Performance
All eleven ASX sectors recorded gains, with Information Technology (+2.10%) leading the market. Other strong performers included:
- Real Estate (+1.63%)
- Utilities (+1.62%)
- Health Care (+1.17%)
- Telecommunication (+1.12%)
The Energy (+0.86%), Consumer Discretionary (+0.73%), and Industrials (+0.67%) sectors also advanced, while Materials (+0.08%) saw only slight gains.
Top Gainers
Several stocks posted impressive gains:
- The Star Entertainment Group Ltd (SGR): +17.39% to $0.135
- Bannerman Energy Ltd (BMN): +9.84% to $2.79
- Ora Banda Mining Ltd (OBM): +8.90% to $0.795
- Bellevue Gold Ltd (BGL): +8.15% to $1.195
- Macmahon Holdings Ltd (MAH): +7.94% to $0.34
Other notable gainers included Clarity Pharmaceuticals Ltd (CU6) (+7.94%), Pantoro Ltd (PNR) (+7.50%), and Boss Energy Ltd (BOE) (+6.51%).
Biggest Fallers
Despite broad market strength, some stocks struggled:
- Aroa Biosurgery Ltd (ARX): -22.50% to $0.62
- Premier Investments Ltd (PMV): -22.05% to $22.27
- Sky Network Television Ltd (SKT): -6.02% to $2.50
- Accent Group Ltd (AX1): -5.46% to $2.25
- Fineos Corporation Holdings Plc (FCL): -4.29% to $1.785
Myer Holdings Ltd (MYR) (-4.17%), St Barbara Ltd (SBM) (-4.08%), and Autosports Group Ltd (ASG) (-3.14%) also recorded losses.
Investor Outlook
The ASX 200’s recent gains indicate renewed optimism. While uncertainty remains around inflation and interest rates, today’s data increases the likelihood of monetary easing.
If the index maintains its momentum, it could reach new highs in the coming months. Investors will closely monitor economic updates and RBA decisions for further direction.