ASX Kicks Off 2025 with Gains as Miners Lead the Charge

Highlights:

1. Market Performance: The ASX 200 rose 0.1% on the first trading day of 2025, led by miners and real estate, despite weak global cues.
2. Corporate News: Lendlease sold its UK construction arm, aligning with its strategic focus on Australian operations, potentially unlocking $2.8 billion by mid-year.
3. Economic Trends: The Australian dollar hit a two-year low, impacted by a strong US dollar, interest rate differentials, and China's slowing economy.

Australian shares marked a strong start to 2025, breaking a two-day losing streak. The S&P/ASX 200 gained 0.1%, closing at 8167.80, defying expectations of a sharp decline following subdued global market signals. Futures had indicated a near 1% drop for the day, but 10 out of 11 sectors opened in the green, with miners and real estate stocks leading the rebound.

Mining Sector in Focus

The mining sector, which struggled throughout 2024, emerged as the day’s standout performer. Mineral Resources surged 2.5%, followed closely by Liontown Resources, which gained 2.3%. The rebound in these stocks signals a renewed focus from traders seeking potential winners for the new year.

Conversely, financial stocks weighed on the market. AMP and Hub24 led the decline in the sector, each falling by 3%.

2024 Market Retrospective

The ASX 200 ended 2024 with a 7.5% annual gain, slightly below the 7.8% increase recorded in 2023. Despite this, sectors such as financials and technology achieved double-digit growth of 28.2% and 49.5%, respectively. These gains were offset by losses in other areas, particularly mining, which underperformed for much of the year.

The broader market saw a sharp sell-off on the final trading day of 2024, capping a year that was initially on track for the strongest performance since 2021, when the index climbed 13% during the pandemic.

Lendlease Restructures Operations

In corporate developments, Lendlease finalized the sale of its British construction business to Atlas Holdings for $70 million. This move is part of a broader restructuring strategy aimed at streamlining operations and focusing on the Australian market. The sale is expected to be profit-neutral but will contribute to unlocking $2.8 billion in capital by June 30, bolstering the company’s financial position.

Australian Dollar Under Pressure

The Australian dollar continued its downward trajectory, dropping below US62¢ for the first time in two years. This 9% annual decline marked its worst performance in six years, driven by a slowing Chinese economy, a stronger US dollar, and divergent monetary policies between Australia and the United States.

Financial markets anticipate the Reserve Bank of Australia to begin cutting rates in the first half of 2025, contrasting with the US Federal Reserve's stance of maintaining higher rates.

Global Market Overview

Global markets remained mostly quiet as many regions observed New Year’s Day holidays. In the United States, stock futures edged lower after a stellar 2024, where the S&P 500 climbed 23.3%, the Nasdaq advanced 28.8%, and the Dow gained 12.9%. Asian futures traded within a narrow range.

Commodities and Cryptocurrency

Bitcoin rose 1.3% to $94,660.99 during early trading on Thursday, continuing its volatile trend after peaking above $109,000 in December. Meanwhile, spot gold increased by 0.7% to $2624.50 per tonne, while iron ore remained flat at $100.97 per tonne.