Weekly Wrap: Rising rates lift AUD and gold as miners lead ASX gains

Firming expectations of rising interest rates helped to push the Australian dollar higher and continued boosting the share prices of miners, particularly those involved in gold extraction.

By the end of trade on Friday, the ASX 200 Index was up 11.4 points, or 0.1%, at 8,860.10 points.

However, it was a mixed market, with three strong sectors solely responsible for the rise, while eight sectors slid lower.

Over a week marked by rising geopolitical tensions and a stronger than expected jobs market with falling unemployment, the ASX 200 slid by 0.5%.

Money markets predict rates will rise

The stronger job market caused a rapid firming in interest rate expectations, with money markets now pricing in a 61% chance of the Reserve Bank hiking the cash rate in February.

It also pushed the Australian dollar to a 16-month high against the US dollar, reaching a high of US68.53¢, and strengthened against most major currencies.

Technology steals the show

Technology was the star performer on the market with Life360 360 the most impressive example, with its shares surging 27.4% to $33.70 after raising its full-year guidance.

The family-tracking app, which has close to 100 million monthly active users, now expects revenue in the range of $US486 million to $US489 million.

It wasn’t a sole effort, with NextDC NXT shares rising 2.7% to $13.32, and Xero XRO shares rising 3.5% to $101.22.

Record gold price pushes miners higher

Gold continued to set new records, hitting a high of $US4,964.99 an ounce as a weakening US dollar maintained investors' “safe haven” enthusiasm for the shiny metal.

That translated into firmer gold shares with Northern Star NST shares up 5.4% to $27.60, Regis Resources RRL shares up 10.2% to $8.35 and Greatland Resources shares GGP up 7.6% to $13.94.

Banking stocks hit reverse after rising on Thursday with Commonwealth Bank shares CBA down 0.8% to $149.48, ANZ shares ANZ down 0.5% to $36.21, Westpac shares WBC down 0.4% to $38.74 and National Australia Bank shares NAB falling 0.2% to $42.35.

The big miners had a mixed day with Rio Tinto shares RIO down 1.5% to $148.72, BHP shares BHP up 0.7% to $48.43 and Fortescue shares FMG rose 0.14% to $21.51.

Fast food action

Guzman y Gomez GYG had a solid day in the kitchen, with its shares up 3.8% to $23.30 after it announced a multi-year exclusive delivery partnership with Uber Eats in Australia from February 22.

Even shares in its flagging fast food competitor Domino’s Pizza Enterprises DMP firmed 0.9% to $24.35 after new ASIC data showed that it had become the most shorted stock on the index, with 17.3% of all shares reported to be in a short position.

Also having a great day were shareholders in IperionX IPX as its shares rallied 7.5% to $8.37, meaning the stock has gained more than 15% for the week.

The company has received an order from American Rheinmetall to produce lightweight titanium components for US Army heavy ground combat vehicles.

The week ahead

The big news for the coming week will be on the inflation front which is the last domino to fall before the RBA decides whether to raise interest rates at its February meeting.

The RBA’s preferred measure of core inflation – the trimmed mean consumer price index (CPI) – is expected to rise by a solid 0.9% in the December quarter with the annual growth rate expected to accelerate to 3.3% from the prior quarter’s 3.0% pace.

Confirmation that underlying inflation pressures are strong will likely be enough to see the RBA hike the cash rate at its February meeting.

Meanwhile, meetings of the US Federal Open Market Committee (FOMC) and the Bank of Canada (BOC) are both expected to keep their official interest rates steady.

For Australian companies there are a swag of quarterly updates due this week for many miners and explorers while in the US the fourth quarter earnings season continues.