The Australian share market today is basically on a tear. Honestly, if you’d looked at the charts back in November when the index took a 7% dive, you probably wouldn’t have bet on the S&P/ASX 200 sitting comfortably at 8,903.9 points right now. But here we are. It’s the highest close we’ve seen since late October 2025, and it feels like the "summer rally" actually decided to show up this year.
The market capped off a five-session winning streak on Friday, January 16, gaining 2.1% for the week. That’s the best weekly performance since November.
Why? It’s a mix of things. You’ve got mining giants hitting multi-year highs, banks finally finding their feet again, and some surprisingly resilient tech stocks. But it’s not all sunshine. While the big miners like BHP and Rio Tinto have been the engine room, there’s a bit of a tug-of-war happening under the surface with interest rate fears and some pretty wild swings in the energy sector.
What’s Actually Moving the Needle?
Resources are the big story. The materials sector (ASX: XMJ) jumped 3.86% over the last week. That’s huge. We’re seeing commodities like gold and copper hit levels that make the big miners look like very attractive places to park cash.
Take BHP for example. It touched a two-year high of $49.75 last Thursday. Rio Tinto followed suit, lifting 3.63% to close at $148.25. Even the lithium players, which had a rough 2025, are seeing some life. Pilbara Minerals (ASX: PLS) hit a two-and-a-half-year high of $5.04 before some people decided to take their profits and run on Friday afternoon.
It’s not just the dirt diggers, though.
The Banking Bounce
For a while, the "Big Four" were looking a bit shaky. But the financials sector (ASX: XFJ) managed a 1.93% gain this past week. Commonwealth Bank (CBA) is sitting around $151.87, which is a decent recovery from the lows it struck late last year.
There’s a bit of global context here. Investors are keeping a nervous eye on what’s happening in the US, particularly with some of the noise coming out of the Trump administration regarding credit card interest rate caps. That kind of stuff usually scares bank investors, but for now, the Aussie banks seem to be shrugging it off.
Gold is Smashing Records
If you own gold miners, you're probably smiling. Gold prices recently hit a record US$4,642.58.
- Northern Star Resources (ASX: NST) rose 8.54% to $26.83.
- Newmont (ASX: NEM) lifted over 7.5% to $169.25.
- Evolution Mining (ASX: EVN) added 2.34%.
When the world gets a bit jittery—whether it's Middle East tensions or inflation worries—gold is the old-school safety net. And right now, that net is made of very expensive thread.
The RBA and the Elephant in the Room
Everyone wants to know when interest rates will finally drop. The current cash rate is sitting at 3.60% after the RBA stayed their hand in December.
But here’s the kicker. While some hope for a cut, the "market" (those smart people trading futures) thinks there’s actually a 22% chance of a hike to 3.85% in February. Inflation is being stubborn. It’s like that guest at a party who won't leave even when you start vacuuming around their feet.
The RBA's latest forecasts suggest they don't expect inflation to settle back into that 2-3% sweet spot until much later in 2026. This means the Australian share market today is operating in a "higher for longer" reality. Rate-sensitive sectors like Real Estate (ASX: XPJ) actually managed to gain 1.72% this week, but they’re the first to bleed when the RBA gets grumpy.
The Winners and Losers You Might Have Missed
It's easy to look at the ASX 200 and think everything is uniform. It isn't.
The Tech Rebound: After getting beaten up, Information Technology (ASX: XIJ) rebounded 1.17% on Friday. However, it's still down about 1.38% over the last five days. Companies like Xero and Life360 have been caught in the crossfire of the "AI fatigue" happening over on the Nasdaq. People are starting to ask, "Okay, we've spent billions on AI, where's the profit?"
Energy's Slide:
The energy sector (ASX: XEJ) took a hit because crude oil prices plunged about 5% recently, dropping to around $59 a barrel. Santos fell, and Beach Energy dropped 4.36% in a single session, basically wiping out its gains from the previous day.
Small-Cap Stars:
If you look outside the big names, some niche players are killing it.
- Lynas Rare Earths (ASX: LYC): Up 9.79% for the week to $15.48.
- South32 (ASX: S32): Gained over 8%.
- 4DMedical (ASX: 4DX): Surged 11.5% on Friday alone.
What Should You Actually Do?
Looking at the Australian share market today, it's tempting to chase the rally. But 8,900 points is a high floor.
First, check your exposure to "defensives." If the RBA does hike in February, the banks and retailers might feel a chill. Health care stocks like CSL and ResMed have finally found some support after hitting multi-year lows, which might make them a safer "value" play than the miners that are already trading at record highs.
Second, watch the Australian dollar. It's currently around 67 US cents. A stronger Aussie dollar is great for your overseas holiday but can eat into the profits of our big exporters (like the miners).
Third, pay attention to the January 22 inflation data. That’s the real "make or break" moment for the next few months. If that number comes in hotter than 3.4%, expect the market to get very nervous, very quickly.
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The ASX 200 is currently testing a target of 9,000 points. We’re close. But in the share market, the last 100 points are often the hardest to climb. Keep an eye on those support levels around 8,700—if we drop below that, the "summer rally" might end up being a short-lived heatwave.
Staying informed means looking past the "record high" headlines and checking which sectors are actually pulling the weight. Right now, it's a materials world, and we're just investing in it.