ASX Gains Ground as Inflation Cools, Avita Medical Faces Setback

January 08, 2025 12:59 PM AEDT | By Team Kalkine Media

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ASX Gains Ground as Inflation Cools, Avita Medical Faces Setback — Image source: shutterstock

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Highlights

Core inflation drops, leading to a recovery in the ASX.

Miners show strong performance, while uranium stocks take a hit.

Avita Medical (AVH) downgraded revenue outlook, causing a sharp dip.

The Australian sharemarket saw a positive shift on Wednesday as traders reacted to a cooling in core inflation, reinforcing expectations that the Reserve Bank of Australia could opt for an interest rate reduction as early as next month. After an early session drop, the S&P/ASX 200 bounced back, trading up by 0.4%, reaching 8319.2 points by midday.

This turnaround was driven by new data from the Australian Bureau of Statistics, which indicated that core inflation fell to 3.2% in December from 3.5% the month prior. Despite a rise in headline inflation to 2.3%, the cooling in core inflation gave investors confidence in the potential for rate cuts, which is expected to stimulate Australian stock growth.

The strength in the broader market was reflected by the performance of five out of the 11 sectors, particularly mining, which rebounded after consecutive losses in recent days. Major mining stocks like (ASX:FMG) Fortescue, (ASX:RIO) Rio Tinto, and (ASX:BHP) BHP all saw gains of around 1% or more, despite iron ore prices remaining at a four-month low. This was a stark contrast to the earlier trend, with the miners showing significant recovery.

However, not all sectors fared equally well. Technology stocks such as (ASX:NXT) NextDC and (ASX:XRO) Xero saw their gains from the morning fade, falling by 1.5% and 1.2%, respectively. Similarly, (ASX:WTC) WiseTech experienced a drop in its stock value.

In terms of notable stock movements, (ASX:STX) Strike Energy surged 5.8%, while Bellevue Gold (ASX:BGL) bounced back by 4.8%, following losses in the previous session. On the other hand, uranium miners such as (ASX:BOE) Boss Energy and (ASX:PDN) Paladin Energy recorded significant losses, down by 4.5% and 3.4%, respectively.

One of the most concerning updates came from regenerative medicine company (ASX:AVH) Avita Medical, which suffered a dramatic drop of 19.1%. The company downgraded its 2024 commercial revenue forecast due to slower-than-expected purchasing activity. The announcement created a sharp downturn in the company’s stock, highlighting investor concerns about growth prospects for the firm moving forward.

Additionally, (ASX:RPL) Regal Partners saw its shares fall by 1.1% following the announcement that its funds under management had exceeded $18 billion for the December quarter. While an impressive milestone, traders appeared to take profits following the update.

On a brighter note, (ASX:WAF) West African Resources made a notable jump of 4.2% after reporting a 7% improvement in gold production for the December quarter, reflecting positive growth prospects. Similarly, (ASX:RIO) Regis Resources reversed its early losses and gained 5.2% on the back of improved production numbers.

As the inflation data continues to shape expectations around future rate decisions, the ASX seems poised to see further movement in the days ahead.

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