ASX soars as inflation data fuels rate cut hopes

The Australian share market ended higher on Wednesday after the latest quarterly inflation data renewed hopes of an interest rate cut by the Reserve Bank in February. The ASX 200 closed at 8,447 points, marking its best monthly session. Better-than-expected inflation figures released by the Australian Bureau of Statistics (ABS) fueled optimism that the Reserve Bank of Australia (RBA) may cut interest rates in its upcoming meeting. All 11 sectors ended higher, with tech stocks gaining 2%. Star Entertainment was the top performer, surging 17.4% after confirming it will sell off its events venue in Sydney. Treasurer Jim Chalmers responded to the positive inflation data, expressing economic and political relief. He emphasized that the country made substantial progress against inflation without harming the jobs market or shrinking the economy. Chalmers took the opportunity to challenge market economists and opposing claims about Australia’s economic performance. The lower-than-expected inflation figures have significantly increased the likelihood of a rate cut in February. Market odds for a rate cut have skyrocketed to 95%, compared to 25% at the start of December.

Inflation data boosts rate cut prospects

Financial analysts believe that the decision, which will be announced on February 18, is now almost certain. Alan Oster, Chief Economist at NAB, noted that the RBA’s situation is complicated. Despite market confidence in a rate cut, Oster described the decision as a “50/50 call,” suggesting it’s not as clear-cut as some believe. In other news, the collapse of Mosaic Brands will lead to nearly 3,000 job losses and the closure of over 700 retail stores across the country. Following its entry into voluntary administration last October, Mosaic confirmed that the final two brands in its portfolio, Millers and Noni B, will also close after no buyers were found. All stores are expected to be shut down by mid-April. Join host Kirsten Aiken on “The Business” as she discusses the potential February rate cut and its economic implications with NAB Chief Economist Alan Oster. Additionally, Armina Rosenberg from Minotaur Capital will provide insights into the rapid rebound of big tech stocks. Catch these discussions tonight at 8:45 pm AEDT. As Australia anticipates the RBA’s February meeting, the latest economic data have injected a dose of optimism into the market. Investors and policymakers will watch closely to see how the central bank responds to these developments.