Market experts rein in hopes of mega investor returns in 2025 despite ASX200 setting fresh record high

Aussie shares have hit a new record high on the back of cooling inflation and hopes for interest rate relief, despite a rough few days on global markets.

The ASX200 reached 8563 points on Friday morning and closed at 8532.30, up 1.5 per cent for the week.

It follows growing optimism that the Reserve Bank will cut rates in February after data on Wednesday showed core inflation at its slowest pace in three years.

The dam appears to have broken on rate cut hopes.

A Bloomberg survey published on Friday showed 20 out of 23 economists tipping the RBA would move at the February 18 board meeting. Money markets price in a 95 per cent chance of relief.

“Australian shares surged to a record high on the back of expectations for a February rate cut after lower-than-expected inflation data helped by the market’s low exposure to AI related tech stocks,” AMP chief economist Shane Oliver said.

Energy and mining stocks dominated the top performers, while the property and tech sectors were strong.

Miners were boosted by an all-time high gold price just a shade below $US2800 an ounce.

Vault Minerals lifted 6 per cent to 38.7¢ a share and big producer Northern Star Resources rose 2.6 per cent to $17.30.

Ramelius Resources climbed 2.7 per cent to $2.47, Newmont surged 4 per cent to $69.29, De Grey Mining was up 3.6 per cent to $2.02 and Evolution Mining was 1.2 per cent higher to $5.72.

But Aussie investors have been warned not to bank on a year of mega-returns.

“After the double digit returns of 2023 and 2024, global and Australian shares are expected to return a far more constrained 7 per cent in the year ahead,” Mr Oliver said.

“Stretched valuations, the ongoing risk of recession, the risk of a global trade war and ongoing geopolitical issues will likely make for a volatile ride with a 15 per cent-plus correction somewhere along the way highly likely.”

Shareholders in the giant US tech industry had first hand experience of just how quickly the world can turn on its head.

The emergence of Chinese AI company Deepseek sent big names including Nvidia — producer of processing units that are crucial for machine learning — into a spin.

Almost $US600 billion ($950b) of value was axed off the company on Monday as shareholders hit the sell button and drove Nvidia stock down 17 per cent.

Later in the week, the US Federal Reserve opted to pause interest rate cuts so as to ensure inflation stays under control, while President Donald Trump announced 25 per cent tariffs on Mexico and Canada would start on Saturday.

The European Central Bank moved forward with a cut overnight on Thursday — with president Christine Lagarde hitting out at Mr Trump’s trade move.

“All we know for sure is that it will have a global negative impact,” Ms Lagarde said.

Westpac head of international economics Elliot Clarke said the months ahead would show how Mr Trump’s strategy plays out.

“The coming weeks and months will be a good test of the responsiveness of the US economy to these policies, in particular which way the risks for investment and employment will skew,” Mr Clarke said.