RBA Rate Cut Creates a Brighter Economic Future

With the RBA announcing a 25-basis point rate cut, the nation’s economic future just got a little brighter. Homeowners are seeing relief as mortgage rates edge down, and businesses are gearing up for what could be a transformative period of growth.

But the timing of this move is what makes it so powerful. Just as Australia is easing rates to support growth, the United States has been hit with a credit downgrade from Moody’s. Stripped of its prized AAA rating, the US is now sitting at AA1 amid ballooning deficits and political gridlock. That contrast couldn’t be sharper.

Global fund managers moving capital into Australian stocks

While America’s fiscal credibility is under pressure, Australia’s AAA rating remains untouched and that’s making global investors take notice. It’s more than a badge of honour. In a market desperate for stability, it’s a beacon.

With net debt at just 31.7 per cent of GDP, far below levels in most advanced economies, Australia is now seen as one of the few remaining low-risk, high-potential destinations for global capital. And we’re already seeing the effects: UBS Sydney Managing Director Clinton Wong stated, “we have seen an uptick of global fund managers trading into Australian stocks”.

RBA playing the long game

Meanwhile, the RBA isn’t just responding to domestic pressures, it’s playing the long game. By cutting rates to 3.85 per cent, it’s keeping its options open for future moves, preserving flexibility if the global economy continues to deteriorate. It’s a move that strengthens Australia’s positioning just as others falter.

For investors, the opportunities are stacking up. The ASX offers compelling value, particularly in banking and infrastructure. For homeowners, stabilising property prices and falling interest rates are creating a rare window to build wealth with confidence.

In a world where the biggest economies are losing ground, Australia is holding steady and standing tall.

What are the best and worst-performing sectors last week?

The best-performing sectors included Communication Services, up 2.96 per cent, followed by Information Technology, up 1.99 per cent and Real Estate, up 1.08 per cent. The worst-performing sectors included Energy, down 1.33 per cent, followed by Materials down 1.17 per cent and Consumer Discretionary, down 0.91 per cent.

The best performing stocks in the ASX top 100 included Technology One, up 16.65 per cent, followed by Evolution Mining, up 11.44 per cent and Northern Star Resources, up 9.82 per cent. The worst-performing stocks included Pilbara Minerals, down 11.54 per cent, followed by IDP Education, down 10.72 per cent, and Mineral Resources, down 9.58 per cent.

What's next for the Australian stock market?

The All-Ordinaries Index extended its winning streak last week, rising under half a per cent and notching its sixth consecutive weekly gain by the close. But beneath the surface, signs of a slowdown are starting to emerge. The weekly trading range has narrowed, and volumes have pulled back, both subtle signals that momentum may be fading.

Adding to this cautious tone, the index briefly pushed above the key 8,600 level but failed to hold it. This inability to break through with conviction reinforces that the 8,600 level is a hurdle. So, with the rally showing signs of exhaustion, a pullback now looks not just possible, but likely. And after six straight weeks of gains, it’s arguably overdue.

For those grappling with FOMO after the market’s strong run, this may not be the moment to jump in. Entering at these elevated levels carries heightened risk, especially as signs of profit-taking begin to surface. If selling pressure does pick up, keep a close eye on 8,375 as the first key support level where buyers might step in. Should that level give way, the next likely area of interest sits around 8,168.

The good news? A healthy pullback could clear the way for the next run up. Once sellers have played their hand and support levels hold, the market could present fresh opportunities for those who’ve stayed patient.

This rally isn’t over, but timing will be everything.

For now, good luck and good trading.

Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the bestselling and award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online.