Live: Inflation on watch for interest rate cut implications, ASX to rise

May Be Interested In:UK may need fewer regulators, business secretary suggests


Market snapshot

  • ASX 200 futures: +0.4% to 8,402 points
  • Australian dollar: -0.6% to 62.52 US cents
  • S&P 500: +1% to 6,073 points
  • Nasdaq: +2.1% to 19,750 points
  • FTSE: +0.4% to 8,534 points
  • EuroStoxx: +0.4% to 532 points
  • Spot gold: +0.8% to $US2,764/ounce
  • Brent crude: +0.6% to $US77.55/barrel
  • Iron ore: -0.1% to $US103.55/tonne
  • Bitcoin: +0.7% to $US102,054

Price current around 7:35am AEDT

Live updates on the major ASX indices:

How likely is rate cut at the RBA’s first meeting in Feb?

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The Business host Kirsten Aiken speak to HSBC Chief Economist Paul Bloxham and ANZ Senior Economist Adelaide Timbrell about the outlook for the economy in 2025, including when Australian borrowers will see a rate cut.

What to expect from today’s CPI print?

The market is typically expecting the December quarter core inflation figure to come in at 3.3% year on year.

The RBA has been trying to tame inflation by using the tool of interest rates. The official cash rate has been left on hold at a 13-year-high (4.35%) for more than a year.

The RBA’s target is to get inflation within a 2-3% range. The September quarter trimmed mean inflation — the RBA’s preferred measure — was 3.5%.

Here are some other key factors that the RBA will consider before they make a decision on interest rates on the 18th of February.

  • Unemployment rate at 4% (Dec)
  • GDP grew 0.3 per cent in the September quarter

Currently, CBA, ANZ and Macquarie have pencilled in a rate cut in February, but other economists say we may not see a rate cut until May or may not even see any rate cut this year.

David Bassanese, chief economist from Betashares, says the December quarter consumer price index (CPI) report will “make or break the case for a February RBA rate cut”.

“My expectation has been that the RBA would leave rates steady next month,” he said in a note.

“However, I now see a material risk that trimmed mean inflation could surprise on the downside, with my updated expectation that it will now drop to 3.2%.

“If right, I would then expect the RBA to cut rates in February.”

China’s DeepSeek could mark the end of US supremacy in AI

If you buy the hype about China’s new chatbot DeepSeek, building a top AI model might cost you a similar amount of time and money as your dream home, replete with a tennis court, swimming pool and water views — roughly two months hunting and $US5.5 million.

Depending on the location, inventing a new AI might even be cheaper and faster than breaking into the property market.

There are reasons to believe that DeepSeek’s creator, a Chinese company by the same name, has exaggerated its thriftiness — more on that shortly — but ignoring the global freak-out it’s triggered would be a mistake.

Writes National Technology Reporter Ange Lavoipierre.

ICYMI: Alan Kohler’s Finance Report

How low can the Aussie dollar go?

The Australian dollar has been under a lot of pressure since October 2023, recently dropping to five-year lows against the greenback.

The local currency is sliding thanks to a strong US dollar, sluggish domestic performance and Australia’s ties to a weak Chinese economy, sending the price of commodities lower.

The price of iron ore has fallen from a 2021 all-time high of almost $US220 dollars a tonne, to just over $US100 dollars a tonne.

A weaker dollar pushes up the price of US imports, making the inflation fight and the task of lowering interest rates more difficult.

The Aussie dollar has been falling against a basket of currencies in recent months, including the pound, euro and US dollar.

The weaker currency is welcome news for businesses that export to countries like the US, but it can be a drain on travellers’ budgets and hit import businesses.

The unpredictability of President Donald Trump and uncertainty around US interest rate cuts makes the Australian dollar vulnerable to further weakness.

Watch this story by David Taylor.

US tech shares recover from Monday sell-off

US stocks rose on Tuesday, with artificial intelligence-linked and other technology shares bouncing back from sharp losses the previous day as investors snapped up bargains.

The Nasdaq led gains. AI chip leader Nvidia added 6.8%, giving the index its biggest boost, a day after its 17% drop erased about one trillion dollars from its market value in the biggest single-session loss for any company.

The S&P 500 technology sector rose 3%, the most of any S&P 500 sector, while an index of semiconductor shares was up 0.5%.

Investors also were eager to hear from Apple, Microsoft and other companies when they report quarterly results this week. Shares of Apple were up 3.9%.

The tech sell-off followed Chinese startup DeepSeek’s launch of AImodels it said were on a par or better than industry-leading US rivals at a fraction of the cost.

“We’re getting the typical bounceback rally you’d expect when you have news that’s not very specific and more of a potential for a future change,” said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

“Some of the tech market, particularly around AI, was ready for a bit of a sell-off, and this news provided the excuse for it. Today you’re seeing the bargain hunters come back in and also those who are discounting the news about DeepSeek since we don’t really know very much about it.”

Nvidia’s forward price-to-earnings ratio, a common valuation metric, earlier hit its cheapest level since December 2023.

On Wednesday, the Federal Reserve is widely expected to hold its lending rate steady in its first interest-rate decision of the year.

ASX to open higher

Good morning and welcome to Wednesday’s markets live blog, where we’ll bring you the latest price action and news on the ASX and beyond.

A rally on Wall Street overnight sets the tone for local market action today.

The Dow Jones index rose 0.3 per cent, the S&P 500 gained 1 per cent and the Nasdaq Composite advanced 2 per cent.

ASX futures were up 39 points or 0.5 per cent to 8,403 at 7:30am AEDT.

At the same time, the Australian dollar was down 0.6 per cent to 62.53 US cents.

Brent crude oil was up 0.6 per cent, trading at $US77.59 a barrel.

Spot gold gained 0.8 per cent to $US2,762.51.

Iron ore was down 0.1% to $US103.55 a tonne.

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