The aussie share market today isn't exactly doing what the morning coffee crowd expected. If you looked at the futures last night, you probably thought we were in for a rough one. Wall Street had a bit of a shocker, with the Dow dropping nearly 1% and the Nasdaq looking pretty shaky. Usually, that’s a recipe for a sea of red on the ASX. But honestly? The local market has a mind of its own lately.
The S&P/ASX 200 actually managed to crawl into the green, gaining about 12 points to hit 8,820.6. It’s a tiny gain, sure. Only 0.14%. But in a week where everyone’s talking about "sticky" inflation and "fragile" global sentiment, a win is a win.
What is actually moving the needle?
It’s all about the rocks and the fuel. While the big banks are dragging their feet—Commonwealth Bank and the rest of the "Big Four" all took a haircut today—the miners and energy giants are doing the heavy lifting. Why? Because the world is getting nervous about supply again.
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Oil prices just hit an 11-week high. You’ve got instability in Iran making traders jumpy, and that’s flowing straight into the pockets of companies like Woodside and Santos.
Karoon Energy was the absolute star of the show, careening 7.4% higher. That’s a massive move for a single session.
Then you have the miners. Iron ore is holding steady above $100 a tonne, which keeps the lights on at BHP and Rio Tinto. But the real heat is in the strategic stuff. Copper and rare earths are basically the new gold. Investors are starting to realize that if you want to build a green future, you need these materials, and there just isn't enough of them to go around.
The inflation elephant in the room
You can't talk about the aussie share market today without mentioning the Reserve Bank. Everyone’s checking their apps for the latest CPI (Consumer Price Index) data like it’s a sports score.
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Here is the weird part: Headline inflation came in at 3.4% recently. That’s higher than the RBA's 2-3% target. You’d think the market would tank on fears of more rate hikes. But the "trimmed mean"—the RBA’s favorite way of looking at the data—actually eased a bit to 3.2%.
It’s a mixed bag.
Some analysts, like those over at Westpac, are noticing that consumer confidence is starting to crack. People are tired. They’re spending less on "fun" stuff and more on just surviving. You can see it in the retail sector performance today. Companies like Endeavour Group (the guys who own Dan Murphy’s) are feeling the pinch as people trade down to cheaper beer or just skip the extra bottle of wine.
Individual stocks making noise
It isn't just the big names moving.
- Monadelphous Group (MND): They just snagged a $300 million maintenance contract with Rio Tinto. The stock is up nearly 100% over the last year. It’s one of those quiet achievers that proves the "boring" service companies are often the best bets during a resources boom.
- Titan Minerals: If you like a bit of a gamble, these guys are up big today on "phenomenal" gold exploration results. Gold hit a record high recently, so anyone finding the yellow stuff is getting a lot of attention.
- EBR Systems: This medical device company is actually doubling its revenue quarter-on-quarter. Brokers like Morgans are screaming "buy" with a target price almost double where it’s trading now.
The rotation is real
We’re seeing a classic "liquidity rotation."
Basically, the money is moving out of banks and into raw materials. Banks are safe, but they don't have the growth potential that a copper miner does when the world is starving for electrification.
The Australian dollar is hovering around 66.9 US cents. It’s a bit weaker than it was, mostly because the US jobs market is surprisingly resilient. When the US looks strong, their dollar stays strong, which makes our commodities more expensive for everyone else. It's a balancing act that usually ends up helping our exporters but hurting your overseas holiday budget.
Is the market "overvalued" right now?
Some people are getting nervous. The ASX 200 is trading near all-time highs.
But if you look at the cash flows, there are still pockets of value. Sites like Webull and Morningstar are pointing to stocks like Kogan and Guzman y Gomez as potentially undervalued. GYG, in particular, has been a wild ride since its IPO, but some analysts think it’s still got plenty of room to grow if it can crack the international market.
Honestly, the aussie share market today is a bit of a jigsaw puzzle. You’ve got high interest rates pushing down on households, but surging commodity prices pulling up on the big miners.
What to do next
If you're looking at your portfolio today, don't panic about the small daily fluctuations. The real story is the shift toward "strategic" assets.
Watch the energy sector. With the situation in the Middle East remaining unpredictable, oil and gas stocks are going to stay volatile. If you're an income investor, the 7% dividend yield on Woodside looks pretty tempting, even if the share price is a bit jumpy.
Keep an eye on the RBA meeting on February 3rd. That’s the big one. The futures market is pricing in about a 36% chance of a rate hike. If that number starts creeping up toward 50%, expect the banks to stay under pressure.
Don't ignore the mid-caps. While the big miners get the headlines, companies like Monadelphous and Codan are showing that there is serious money to be made in the companies that support the mining industry.
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The aussie share market today isn't for the faint of heart, but for those who know where to look, the opportunities are there. Stick to the companies with real cash flow and stay away from the "hype" stocks that don't have a clear path to profit.
The next few weeks will be telling as more companies report their half-year results. That’s when we’ll see who is actually making money and who is just talk. Stay skeptical, stay diversified, and keep an eye on that oil price.
Investors should prioritize rebalancing toward energy and materials while the commodity cycle remains hot, but keep enough cash on the sidelines to jump on quality retailers if the RBA finally decides to pivot later this year.