Banks Propel ASX Surge as Robust Employment Data Elevates Rate Hike Prospects
The Australian share market experienced fluctuations after robust employment data heightened expectations for an interest rate hike next month. Early gains were influenced by a rally on Wall Street, which responded positively to reduced tensions surrounding U.S. President Donald Trump’s controversial Greenland acquisition proposal.
Key Market Movements
The S&P/ASX 200 index jumped 65 points, or 0.7 percent, reaching 8,847.9. Nineteen of the top twenty stocks in the index showed positive momentum.
Impact of Employment Data
On January 22, 2026, the Labour force report revealed that Australia added 65,200 jobs in December, lowering the unemployment rate to 4.1 percent from 4.3 percent in November. According to AMP’s deputy chief economist Diana Mousina, the likelihood of an interest rate increase in February surged from 26 percent to 56 percent after this announcement.
Financial Sector Performance
- Commonwealth Bank: Up 1.6%
- Westpac: Up 1.1%
- National Australia Bank: Up 2.6%
- ANZ Bank: Up 0.6%
Among the mining sector, Rio Tinto gained 1.1 percent while BHP dropped 0.5 percent. Fortescue Metals reported a significant drop of 4.4 percent, notwithstanding a record shipping volume of iron ore for the last six months of the year.
Regional Influence on Market
U.S. President Trump’s easing of aggressive trade rhetoric contributed to market optimism. Trump claimed the U.S. had established a “framework” for potential agreements regarding Greenland, leading to a rebound on Wall Street. The S&P 500 rose 1.2 percent following this news.
Broader Economic Indicators
- U.S. Dollar: Trading at US67.64 cents.
- 10-Year Treasury Yield: Decreased from 4.30 percent to 4.25 percent.
- Global markets: Varied results with Japan’s Nikkei 225 declining by 0.4 percent.
Global economic factors, including the situation in Japan, added complexity to market predictions. Prime Minister Sanae Takaichi’s announcement of a snap election raised concerns about increased government spending and debt levels.
Overall, the ASX reflects the influence of both local and international events on stock performance, with employment data steering the narrative toward potential interest rate hikes. Investors will be closely monitoring future developments and their implications on market trends.
