AUS
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Highlights
- The S&P/ASX 200 index remains flat at 8,410.5, as losses in commodities and IT stocks are offset by gains in financials.
- Traders are awaiting local inflation data to assess the Reserve Bank of Australia's likely interest rate decision, with a 70% chance of a rate cut to 4.10%.
- Red Hawk Mining shares soar 46% after Fortescue Metals Group announces a $159 million acquisition offer.
Australian shares showed limited movement on Tuesday as the market struggled to find direction. Losses in commodity and IT stocks were offset by gains in financials, leaving the S&P/ASX 200 index largely unchanged at 8,410.5 as of 23:47 GMT. The market had been closed on Monday for a public holiday.
Traders were awaiting the release of the fourth-quarter consumer price index (CPI) report, due on Wednesday, which is expected to influence expectations around the Reserve Bank of Australia’s (RBA) policy stance. There is now a 70% chance that the RBA will cut borrowing costs to 4.10% at its meeting in mid-February. Australia’s underlying inflation measure had already slowed to 3.2% in November, down from 3.5% the previous month, providing further support for the view that a rate cut is likely.
On the bourse, heavyweight miners saw a slight decline of 0.2%. The materials sub-index (XMM) slipped, in line with broader weakness in commodity stocks. Energy stocks also struggled, with the energy sub-index (XEJ) falling 1.3%, hitting its lowest point since January 2. The drop came after oil prices lost about 2% overnight, marking the fourth consecutive session of losses in the energy sector. Woodside Energy (ASX:WDS) lost 0.9%, while smaller peer Santos (ASX:STO) dropped 0.4%.
In contrast, Red Hawk Mining (ASX:RHK) experienced a significant rally, with shares soaring 46% after an announcement that Fortescue Metals Group (ASX:FMG) would acquire the company in a AU$254 million ($159.11 million) deal. This acquisition pushed Red Hawk’s stock to its highest level in nearly four years.
IT stocks also saw losses, with the sub-index (XIJ) declining 1.4%. The downturn followed a sell-off in U.S. chipmakers triggered by the emergence of a low-cost Chinese artificial intelligence model. NEXTDC (ASX:NXT) was hit particularly hard, slumping 8%, marking potentially its worst trading day since November 2020.
The financial sector bucked the trend, with the financials sub-index (XFJ) rising by 0.4%, hitting its highest level since December 3. The "Big Four" banks—Commonwealth Bank, Westpac, ANZ, and NAB—all saw gains between 0.5% and 0.7%. While lower interest rates can negatively affect banks' margins, they can also stimulate credit growth and improve borrowers' capacity to meet mortgage payments, which is beneficial for the financial sector.
In New Zealand, the benchmark S&P/NZX 50 index (.NZ50) declined 0.6% to 12,925.37, marking its lowest level since 15 January 2025.
