ASX jumps as inflation news boost rate cut hopes

Energy stocks also had a strong day after Tuesday’s losses, buoyed by gains in Woodside Energy (up 0.8 per cent), Ampol (up 0.7 per cent) and Yancoal (up 0.2 per cent). Origin Energy was also up 1.6 per cent and Meridian Energy climbed 1.5 per cent.

Meanwhile, shares in embattled casino operator Star Entertainment were up 13 per cent after the cash-strapped company announced it’s selling several Sydney assets, including its Star Sydney Event Centre, for $60 million to Foundation Theatres.

In an ASX statement, Star CEO Steve McCann said management “had worked closely with the team at Foundation Theatres since they acquired the sublease for the Sydney Lyric [theatre] in 2011”.

“We continue to work on a number of other potential non-core asset transactions,” he added.

The laggards

Materials were the only sector in red on Wednesday, with mining heavyweights BHP and Rio Tinto down 0.9 per cent and 1.2 per cent, respectively. Coles had a choppy afternoon, with the supermarket giant falling 0.2 per cent, while Woolworths rose 0.4 per cent.

The big banks were mixed, with Westpac (up 0.5 per cent) and ANZ (up 0.3 per cent) in the green, however NAB and CBA were down 0.8 per cent and 0.1 per cent, respectively.

The lowdown

Westpac chief economist Luci Ellis said the “better than expected” inflation data tips the balance back in favour of a February rate cut.

“With trimmed mean inflation at 0.5 per cent in the quarter, we have just enough evidence to conclude that disinflation has proceeded faster than the RBA expected, so the board will have the required confidence to start the rate-cutting phase in February,” she said.

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CreditorWatch’s Chief Economist Ivan Colhoun also said there was “a lot to like” in Wednesday’s CPI release, which meant “the RBA will be able to revise down inflation forecasts for the first time for quite some years and the board will be able to sign off on what I expect will be the beginning of a modest recalibration of interest rates at the mid-February board meeting”.

“I don’t expect it to be a particularly large easing cycle,” he added, predicting a 25 basis point cut for next month.

In the US, the spotlight remained on Nvidia, whose chips are powering much of the move into AI and whose stock has become a symbol of the surrounding frenzy. It rose 8.8 per cent after plunging nearly 17 per cent the day before, which was its worst drop since the 2020 COVID crash.

Other AI-related companies also held steadier, including chip company Broadcom, which rose 2.6 per cent. Constellation Energy picked up 1.4 per cent after plummeting nearly 21 per cent on Monday. It had earlier rallied on expectations it will help supply the electricity that vast AI data centres would gobble up.

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Such revenues are threatened after DeepSeek said it was able to develop a large language model that can perform as well as big US rivals, but at a fraction of the cost.

That raises questions about whether all the spending expected for AI chips and electricity will need to happen.

AI-related stocks have been Wall Street’s biggest stars in recent years, soaring on expectations that big spending will only continue to grow. The gains, though, also created criticism that their stock prices had simply gone too high, too fast.

Tweet of the day

Quote of the day

“America spent the past three years trying to build a wall around its most advanced semiconductors. DeepSeek has just blown a trillion-dollar hole in it.”

Read more of Stephen Bartholomeusz’s opinion piece here. 

You might have missed

In the race for AI domination, what are the main differences between DeepSeek and US chatbots such as ChatGPT? This masthead put it to the test and asked the same three questions to both chatbots. Read more here. 

with AP

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