The Australian share market celebrated the first trading day of the New Year more like a partygoer with a hangover than with a celebratory glass of champagne.
After Wall Street ended 1995 with a daily loss across the Dow Jones, S&P 500 and Nasdaq, Australia welcomed in the trading New Year with losses in the mining sector and technology down as well.
The lacklustre start to a New Year came amid some share price rises in the most unlikely of sectors – energy – which rose 0.7% despite a tepid recovery in oil prices which had weakened on fears of oversupply.
Unconvincing rise on the back of US futures
Nevertheless, the market managed to end marginally up after trading down on Friday morning, snapping a four-session losing streak leading into the New Year in the process.
The ASX 200 ended up 13.5 points, or 0.2% at 8727 points after recovering from falling in concert with the negative lead from Wall Street in the morning.
The main reason for the turnaround was probably US market futures turning positive for its first trading day of the New Year.
Giant nothingburger apart from energy
However, Australian investors remained muddle-headed, producing a thin day of trade that was essentially a giant nothingburger to end the strange week straddling Christmas and the New Year.
To illustrate this, energy was the only sector to move more than 0.5% in either direction, gaining 0.7%, with all other sectors just puddling around.
Uranium miners were a big help for the energy sector, with shares such as Boss Energy (ASX: BOE), Paladin Energy (ASX: PDN) and Deep Yellow (ASX: DYL) all jumping more than 5% higher.
Droneshield recovers hard
One of the more notable turnarounds in the ASX 200 came from controversial defence tech firm DroneShield (ASX: DRO), which rebounded from a three-day losing streak to rise 8.1% to $3.33.
Perhaps the New Year hangover has a very rational basis, given that traders are desperately looking for some direction for interest rates.
Inflation numbers could point to steady rates
That hangover cure could very well arrive this coming Wednesday when the November CPI inflation number will be released.
Most economists think the annual rate will fall slightly to 3.6%, which might renew hopes for official interest rates to stay steady for a few months, or even longer should inflation continue to fall or slide gently lower.
However, any signs that inflation is continuing to rise will meet with a strong reaction indeed, so the CPI release on Wednesday looms as a particularly important one for setting the tone for the market in the early part of the year.
After all, it was a spike in the consumer price index late last year that drove up the probability of an interest rate hike from the Reserve Bank.
Bad news hits Northern Star
While gold and silver prices recovered a little after falling near the end of 2025, bad news managed to pull in the opposite direction for shares in Northern Star Resources (ASX: NST), which fell 8.6% to $24.43 after the gold miner revised down its annual production guidance.
This followed on from several unplanned maintenance and operational challenges at its Kalgoorlie mine.
The week ahead
As mentioned earlier, the CPI numbers out on Wednesday will be pivotal for the direction of the market.
However, there are other releases to watch out for in the coming week both in Australia and overseas.
Locally, building approval numbers and international trade are of the utmost importance.
Building approvals are expected to rise by about 2%, as government stimulus measures finally start to be reflected in the official figures, while Australia’s trade surplus is expected to rise to about $4.6 billion, helped along by booming gold sales.
Internationally, the main releases to watch out for include manufacturing, services, and job numbers from the US.
