Sydney, Jan 29, 2026, 21:50 AEDT — Market closed
- ASX 200 closed 0.07% lower at 8,927.5, recovering from earlier dips as gains in miners and energy stocks balanced out weakness in tech and rare earth sectors
- After inflation came in hotter than expected, traders are recalibrating their rate forecasts ahead of the RBA’s decision next Tuesday
- Gold hit new record highs while the Australian dollar stayed close to its peak in three years, driving sector rotation
Australian shares dipped slightly on Thursday, weighed down by declines in rare earth and tech stocks, despite miners and energy sectors gaining on stronger commodity prices. The S&P/ASX 200 ended 6.4 points lower at 8,927.5. 1
The modest shift carried weight after inflation data surprised on the upside, pushing the Reserve Bank of Australia closer to a potential rate hike soon. Headline CPI climbed 3.8% year-over-year through December, with “trimmed mean” inflation — which excludes the most extreme price changes — hitting 3.3%. 2
Rate-sensitive areas of the market took a hit. “The anticipation of tighter monetary policy has clearly dampened sentiment on the ASX today,” said Tim Waterer, chief market analyst at KCM Trade. Financials dropped 0.3%, with Commonwealth Bank of Australia and Westpac falling 1.1% and 1.0%, respectively. 3
Tech lagged once more, with the IT sector slipping around 1.9%. Shares in Xero dropped 3.6%, and WiseTech Global slid 2.2%. Meanwhile, materials climbed 0.92%, and energy added 0.85%, buoyed by strength in gold and copper-linked stocks even as certain lithium names took a hit. 4
Rare earths remained volatile. Iluka announced it expects a non-cash impairment of roughly A$350 million before tax in its mineral sands division. The company also flagged total exceptional charges of A$565 million pre-tax for the year ending Dec. 31. The news weighed heavily, triggering the stock’s biggest one-day drop in two months. 5
ASX Ltd surged 7.31% to A$57.39 among the big movers. Reece climbed 6.8% to A$14.77, and Sandfire Resources rose 5.09% to A$21.28. On the downside, Iluka tumbled 13.85% to A$5.57, with DroneShield slipping 9.37% to A$3.58. 6
The Australian dollar climbed briefly to $0.7050, hitting a three-year high, before retreating to about $0.7025 amid shaky risk appetite following mixed earnings from U.S. tech giants. Goldman Sachs chief economist Andrew Boak described February’s Reserve Bank of Australia decision as “a very close call.” 7
Economists remain divided on whether the RBA will act right away, but some banks have updated their forecasts following the inflation report. Westpac’s chief economist Luci Ellis now anticipates a “one and done” rate increase, whereas Abhijit Surya from Capital Economics says a hike seems “all but certain.” 8
Overnight, global rates remained under scrutiny after the U.S. Federal Reserve kept the fed funds target range steady at 3-1/2 to 3-3/4%, calling growth solid and inflation “somewhat elevated.” Two officials broke ranks, pushing for a quarter-point cut, highlighting rising tension in the policy debate. 9
Thursday’s close in Sydney didn’t end the local debate. Should the RBA hint at a wider tightening cycle, or global bond yields push higher once more, expect long-duration growth stocks and property-linked shares to slide further. A drop in gold or oil prices would also put pressure on miners and energy stocks, which have been propping up the market.
The RBA will announce its Monetary Policy decision and release its statement on Feb. 3 at 2:30 p.m. AEDT, with a media conference set for 3:30 p.m. Traders will also be eyeing February earnings reports for clues on margins and demand. 10
