ASX slides as rate fears return, tech rebounds and commodities tell a split story

Key highlights

• ASX 200 falls 0.6% as rate hike expectations weigh on sentiment
• Technology stocks rebound sharply, led by Appen’s near-30% surge
• Rare earth and lithium miners sell off on policy uncertainty and impairments
• Gold continues its global rally, supporting selective miners
• Wall Street drifts as the US Federal Reserve holds rates steady
  
   

Australian shares drifted lower on Thursday as renewed concerns over interest rates overshadowed pockets of strength in technology and energy, leaving the market searching for direction as January draws to a close.

By early afternoon, the S&P/ASX 200 was down 0.58% to 8,882 points, with nine of eleven sectors in the red. The weakness reflected growing conviction that the Reserve Bank of Australia may be forced to lift rates sooner rather than later after recent inflation data surprised to the upside.

At the same time, stock-specific stories drove sharp moves beneath the surface, reminding readers that even on softer days, the ASX can still deliver drama.

Rates back in focus

The selling pressure was broad but measured, rather than panicked. Financials, real estate and consumer discretionary stocks bore the brunt, all sectors sensitive to higher borrowing costs.

Economists remain divided on the RBA’s next move, but the tone has shifted. Several major banks now expect at least one rate hike in February, with Westpac chief economist Luci Ellis noting earlier this week that December quarter inflation had “cast the deciding vote” in favour of tighter policy.

That uncertainty was enough to sap confidence across large parts of the market, particularly among interest-rate-exposed sectors.

Tech finds its moment

Against that cautious backdrop, the technology sector delivered one of the day’s few bright spots.

The ASX All Technology Index fell overall, but that headline masked a standout performance from Appen Ltd, which surged 29.6% to $1.40, making it the day’s top gainer among mid-caps and large stocks.

The rally followed a quarterly update that exceeded expectations, with Appen reporting December quarter revenue of $73.4 million, up 10% year on year, and underlying EBITDA more than doubling to $13.3 million. An 81% jump in Chinese sales proved particularly eye-catching.

Source: LSEG, ASX

For a company that has shed more than 90% of its value over five years, the move marked a reminder of how quickly sentiment can turn when numbers improve.

Other technology names were more subdued, but Appen’s rebound helped stabilise a sector that has struggled amid higher rates and volatile global tech sentiment.

Miners split by commodity

The resources sector told a tale of two markets.

Gold continued its relentless climb, with spot prices rising more than 2% to above US$5,530 an ounce, buoyed by global uncertainty and a softer US dollar. That provided some support to gold-linked names, although gains were uneven.

Elsewhere, uranium stocks found buyers, with Deep Yellow Ltd up 10% and NexGen Energy gaining just over 5%, as enthusiasm around nuclear energy remained intact.

In contrast, rare earth and lithium stocks were firmly out of favour.

Iluka Resources Ltd fell almost 14%, one of the worst performers on the board, after flagging $565 million in impairment charges tied to its mineral sands division. The company said the charges were non-cash but acknowledged weaker pricing conditions.

Iluka’s slide dragged peers lower, with Lynas Rare Earths and Meteoric Resources also suffering double-digit losses as policy uncertainty around critical minerals resurfaced.

According to Reuters, US officials have recently stepped back from plans to guarantee minimum prices for rare earth projects, removing a layer of support that markets had hoped would underpin the sector.

Today’s top performers

Despite the broader market weakness, several stocks stood out on the upside:

• Appen Ltd +29.6%
• Deep Yellow Ltd +10.0%
• Tamboran Resources +10.0%
• Imricor Medical Systems +7.8%
• Reece Ltd +6.3%
• ASX Ltd +5.7%, helped by broker upgrades
  
   

The list reflected a mix of earnings-driven rallies, commodity momentum and selective buying in quality names.

Biggest laggards

On the downside, losses were concentrated among miners and materials stocks:

• American Tungsten and Antimony -17.5%
• Galan Lithium -14.9%
• European Lithium -14.4%
• Calix Ltd -14.3%
• Ora Banda Mining -14.2%
• Iluka Resources -13.9%
  
   

The selling reinforced how sensitive commodity stocks remain to both policy headlines and company-specific updates.

Global markets offer little guidance

Overnight leads from offshore markets were mixed.

On Wall Street, the Federal Reserve kept interest rates on hold, as expected. The S&P 500 finished flat, the Dow Jones edged slightly higher and the Nasdaq added a modest 0.3%, as investors weighed steady growth against lingering inflation pressures.

In Asia, sentiment was brighter. Hong Kong’s Hang Seng jumped more than 2.5%, while Japan’s Nikkei 225 and China’s Shanghai Composite posted small gains.

European markets were weaker, reflecting similar rate concerns seen in Australia.

Commodities and currencies

Commodity prices were supportive but selective.

Oil prices rose around 1%, helping energy stocks edge higher, while copper gained more than 2%, hinting at improving industrial demand. Iron ore, however, slipped below US$104 a tonne, pressuring bulk miners.

The Australian dollar eased slightly to around US 70.3 cents, remaining near multi-year highs. CBA currency strategist Kristina Clifford said the local currency was being supported by stronger inflation data but warned uncertainty remained around the RBA’s urgency to hike.

The bigger picture

Thursday’s session captured the market’s current mood. Cautious, selective and increasingly focused on policy signals rather than broad optimism.

While rate fears are back on the agenda, sharp moves in stocks like Appen show that earnings and execution still matter. For now, the ASX remains a market of contrasts, where conviction is hard to find but opportunity still appears in pockets.