ASX moves higher, led by rally in technology stocks

Welcome to your five-minute recap of the trading day.

The numbers

The Australian sharemarket advanced for the fourth consecutive session on Tuesday after sharp gains in tech stocks offset losses from miners and utilities.

The S&P/ASX 200 index was up 27.7 points, or 0.3 per cent, to 8285.1 at the close. Eight out of 11 sectors traded higher, with tech (up 1.5 per cent) and communication services (up 1.3 per cent) leading the pack, and materials (down 0.5 per cent) and utilities (down 0.9 per cent) driving the declines.

The sharemarket is tipped to rise in 2025, buoyed by hopes of an early rate cut by the RBA.Credit: Dominic Lorrimer

The lifters

Large-caps NEXTDC (up 2.9 per cent) and XERO (up 2.2 per cent) sharply rose to drive the local tech sector 1.5 per cent higher on the back of the Nasdaq lifting 1 per cent overnight. Shares in WiseTech (up 0.4) and TechnologyOne (up 0.2 per cent) were also trading higher, as technology stocks gained following a rise in the shares of US chip-making giant Nvidia, which also announced new products on Tuesday.

Hub24, a wealth management technology firm, jumped 3.7 per cent to become the best performing large-cap stock on the ASX on Tuesday, followed by Qantas (up 3.6 per cent) and CAR Group (up 3.4 per cent.

Consumer discretionary stocks finished 0.7 per cent higher, as investors bet on improved consumer sentiment following new ANZ-Roy Morgan survey data showing consumer confidence jumped 3.6 points in the first week of 2025.

ANZ economist Madeline Dunk said tax cuts, rising real wages and an interest rate cut expected in May would continue to boost disposable income.

Aristocrat Leisure (up 2.4 per cent) was among the best performing large caps, while Premier Investments rose 1 per cent, Lottery Corporation was up 0.4 per cent, JB Hi-Fi lifted 0.1 per cent and Breville Group climbed 1.2 per cent. However, Wesfarmers (the owner of Kmart and Bunnings) fell 0.2 per cent and Harvey Norman was down 0.6 per cent.

Wealth manager Insignia Financial, which jumped 14.7 per cent on Monday after receiving a non-binding $2.9 billion takeover proposal from private equity firm CC Capital Partners, fell slightly at the session’s open but closed 1 per cent higher at $4.10.

Morningstar equity analyst Shaun Ler said the bid indicated Insignia was undervalued and its earnings outlook was brighter compared to the last financial year. It has lifted its “fair value estimate” from $3.60 to $3.95 per share.

“The firm is recovering from past headwinds that hurt its ability to attract and retain client assets and improve profitability,” Ler wrote in a note. “These include the royal commission in 2018 and the sharp rate rises of 2022-23.”

The laggards

Miners and utilities companies were among the worst performers on the ASX after commodity prices fell overnight. Iron ore was down 1.2 per cent to four-month low of $US96.10 a tonne, Brent crude slumped 0.7 per cent to $US76 a barrel, and spot gold declined 0.2 per cent to $US2635.63 an ounce.

BHP (down 0.7 per cent), Fortescue (down 4.4 per cent) and Rio Tinto (down 0.7 per cent) all slumped, while utilities stocks Meridian Energy (down 5.2 per cent), Origin (down 0.7 per cent), APA (down 0.4 per cent), AGL (down 1.8 per cent) and Mercury NZ (down 1 per cent) also retreated after the yield on 30-year US Treasuries climbed to its highest point in over a year.

Meridian and Fortescue were the biggest large-cap losers, followed by Yancoal (down 2.7 per cent), Whitehaven Coal (down 2.3 per cent), Washington H Soul Pattinson and Company (down 2.2 per cent) and Insurance Australia Group (down 2.1 per cent).

The lowdown

Investors are awaiting this week’s US payroll data for December, which is expected to show employers tempered hiring to wrap up a year of moderating yet still-healthy labour market activity. The data is unlikely to alter the view of Federal Reserve officials that they can slow the pace of rate cuts amid a durable economy and inflation that’s fading only gradually.

Locally, figures from the ABS on Tuesday showed total dwelling approvals fell 3.6 per cent in November, but were still up 3.2 per cent in annual terms, which economists said pointed to a slow recovery.

Housing Industry Association senior economist Matt King said the figures were a positive sign for home building, with market confidence returning in most capital cities.
“Following a period of prolonged weakness, there are signs of life again in building approvals, which is pointing to a nascent recovery in new home building,” King said.

“November 2024 marked exactly one year since the RBA last raised interest rates. Unchanged interest rate settings have provided a welcomed degree of certainty for consumers.”

On Wall Street overnight, the S&P 500 rose 0.6 per cent. The Nasdaq 100 added 0.9 per cent.

Nvidia jumped 4 per cent towards a record ahead of chief executive Jensen Huang’s speech. Banks climbed on deregulation optimism, with Michael Barr stepping down as the Federal Reserve’s vice chair for supervision. The news also fuelled a steepening of the Treasury curve, with longer maturities underperforming. The yield on 30-year bonds hit the highest since late 2023.

The US dollar trimmed losses as President-elect Donald Trump said his tariff plan won’t be scaled back. While equities came off session highs, a rally in tech megacaps put the S&P 500 on track for a back-to-back advance of almost 2 per cent. The Australian dollar was trading around US62.67¢ at 5pm.

Quote of the day

“That’s not on. One of the great things about Australia – unlike some parts of the world [where] you go and you’ve got to pay to go to the beach – here, everyone owns the beach. Everyone. And it’s a place where every Australian is equal. And that’s a breach of that principle, really, to think that you can reserve a little spot as just yours.”

Prime Minister Anthony Albanese has weighed into the debate over beachgoers using cabanas to secure prime spots on beaches.

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With Bloomberg

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