SYDNEY, Jan 29, 2026, 17:06 AEDT — Market closed
- Xero dropped 3.1% to A$94.90, with shares fluctuating between A$98.14 and A$94.01 during the session.
- Rising inflation figures have traders eyeing a February RBA rate hike again, weighing on tech stocks.
- Investors are focused on the RBA meeting set for Feb. 2–3 and any new company updates that emerge.
Xero Limited’s shares dipped 3.1% on Thursday, finishing at A$94.90 amid pressure on Australian tech stocks from rising rate expectations. The accounting software firm’s stock fluctuated between A$98.14 and A$94.01 during the session.
The next Reserve Bank of Australia decision is just days off, and traders are already adjusting rate expectations. In growth software stocks, even slight changes in policy outlook can trigger sharp moves.
Xero, known for its cloud accounting and payroll software aimed at small businesses and advisers, has tumbled significantly from last year’s peak. Its shares currently trade roughly 51% below their 52-week high, data from Morningstar shows.
Wednesday’s inflation figures pushed expectations for tighter policy back into focus. According to a Reuters report, trimmed-mean core inflation climbed 0.9% in the December quarter, beating forecasts. The market now prices in over a 70% chance of a 25 basis point hike on the 3.6% cash rate, with further increases anticipated by May.
Belinda Allen, head of Australian economics at Commonwealth Bank of Australia, said the latest inflation data revealed price pressures remain “still too high.” She added the evidence points to a rate hike to bring inflation closer to the RBA’s 2%–3% target range. CommBank
Westpac chief economist Luci Ellis echoed this view, saying December-quarter inflation held “the casting vote” and it chose “Yes, hike.” Westpac forecasts a 25 basis point increase to 3.85% at the February meeting, but still sees a “one-and-done” hike as its baseline. Westpac IQ
The wider tech sector remained under pressure. Investors offloaded rate-sensitive software and platform shares ahead of month-end, dragging down local names like WiseTech Global and TechnologyOne as well.
Xero didn’t announce any major updates, but a Wednesday filing revealed several classes of unquoted securities had expired. The company said 54,279 restricted stock units and 994 options lapsed after failing to meet their conditions. Following these changes, Xero now has 169,911,871 ordinary shares on issue.
Those lapses don’t generate cash. They might reduce potential dilution from employee-linked awards a bit, but the stock’s daily moves remain driven by rates and risk appetite.
The rate story runs both ways. If the RBA stands pat and resists the market’s tightening expectations, battered tech stocks could rebound; but if it hikes and hints at more to come, high-valuation names like Xero might have a hard time stabilizing.
All eyes are on the RBA’s Feb. 2–3 meeting now. Traders will scrutinize the Feb. 3 decision statement for clues on whether the central bank plans just one hike or the start of a series.
