Vitti Capital Markets Update – January 2026

Monthly Markets Update – January 2026

January kicked off the year with a strong and calm equity environment.

Big themes worked, but not everything went along for the ride. Precious metals were off the charts with exuberance, while parts of tech cooled off again, and anything exposed to policy risk got slapped around.

Volatility is at healthy levels, with plenty of opportunities to let out some steam, and plenty of tailwinds to jump in front of.

Global political chaos from Greenland takeover attempts to an actual Venezuela takeover and violence on the streets of Minneapolis wasn’t able to dampen the mood.

Australian Market

The ASX 200 finished December at 8,714.3 and closed 29 January at 8,927.5, up 2.45% for the month. We sold off early in the month, then recovered, then held. There are still plenty of buyers waiting under the surface.

The index also spent late January testing the 8,900s repeatedly. That is where the fight is. If we keep holding that zone, the path of least resistance is the all-time highs above 9100.

If we lose it, we are back in chop and frustration, and stock-picking becomes the only game in town again.

ASX 200 Index (ASX:XJO) Chart (Source: TradingView)

Inflation and Interest Rates

The biggest domestic data point this month was CPI rising 3.8% in the 12 months to December 2025, up from 3.4% in November. Housing was the biggest driver again, up 5.5% over the year, and it keeps refusing to roll over.

The RBA is now under immense pressure to hike interest rates. Every meeting is now ‘live’ with the first full hike priced for May 2026.

Runaway inflation remains one of our key risks to watch for 2026.

Over in the US, the Fed held its benchmark rate steady at 3.50% to 3.75%, and the statement kept the key message intact. Inflation remains somewhat elevated. The Fed is not panicking, but it is not declaring victory either.

That combo, sticky inflation in Australia and ‘steady but watchful’ in the US, is why January felt constructive but not euphoric. The market wants to rally. It just needs inflation to stop throwing cheap shots.

Sector Themes

Technology

Tech was awkward this month, with little cohesion and many repricings. The ASX tech sector was down about 6.2% across the month, with heavyweights like WiseTech (ASX:WTC), Xero (ASX:XRO) and Technology One (ASX:TNE) contributing to the drag.

This is the same story we’ve been seeing since late 2025. When rates threaten to stay higher for longer, high-multiple growth gets treated like a luxury good.

People still want it, but they wait for a discount. The opportunity is still there for the highest quality names, but timing matters, and entry price matters even more.

Commodities

Energy and materials carried the torch when the index needed support. Oil pushed higher late in the month on rising geopolitical risk, which keeps a bid under energy earnings and under the inflation narrative at the same time.

On the materials side, the market had its eyes on ‘real stuff’. January saw strong interest in gold, uranium, and the broader commodity complex, even as parts of rare earths struggled on policy and pricing uncertainty.

Gold strength has been one of the cleanest tells in global markets. When gold is this strong, it’s not just a commodity story, it is a confidence story. It says investors are still hedging, diversifying, not fully buying the ‘soft landing and straight back to easy money’ dream.

And of course, Silver won’t be outdone. Check out the following Silver Futures Chart. The sell button on precious metals seems to have been misplaced.

Silver Futures (MCX:Silver1!) Chart (Source: TradingView)

Buying physical gold has become an actual physical meme, with dozens of stories across the front pages in the last few months of queues to buy the tangible material.

Uranium also punched into the headlines late in the month, with prices exceeding US$100/lb and sparking big moves in uranium miners. Whether that price level holds is less important than the message. The market is pricing a future where baseload power demand grows, and the grid gets rebuilt for AI, electrification, and defence resilience.

Standout Stocks and Stories

Appen (ASX:APX) popped hard late in the month after a positive earnings update, with a move of more than 30% on the day. When you see that kind of move in a beaten-up tech name, it is a reminder that the market is still hungry for turnaround stories, but only when the numbers show up.

Northern Star (ASX:NST) and Evolution (ASX:EVN) stayed in focus as the gold tape stayed firm. When gold is moving, the market goes straight to liquidity first, and the big gold names tend to be the first beneficiaries.

Rare earths were a warning label. Lynas and Iluka were called out as laggards amid reports around US policy uncertainty, and it was a reminder that ‘strategic commodity’ does not mean ‘risk free’. Policy can change faster than drill rigs can turn.

Quality Brands on the Radar

The other quiet story in January was value creeping back into quality. Not deep value. Not cigar butts. Quality brands and real cashflow businesses that people stopped loving because the price got too spicy.

This is where the next 12 months can get interesting. If inflation stays sticky, the market will keep rewarding earnings certainty and pricing power. If inflation fades, the market will start paying up for growth again. Either way, the ‘middle quality, no edge’ businesses are the ones that get left behind.

February Outlook for the ASX – Key Themes and Risks

First up, the market is staring straight at the next inflation prints. December CPI was hot, and now everyone wants to know if it was a bump or the start of another leg higher.

Keep an eye out for the next CPI print in late February.

Second, interest rate expectations remain the dominant driver, again. You can feel it in sector performance. You can see it in what gets bought on dips. If the market thinks rates stay higher, defensives and cashflow win. If the market thinks cuts come back into view, tech and high growth get oxygen again.

Third, geopolitics stays a live wire. Oil moving on headline risk is not just an energy sector story, it is an inflation expectations story. If that risk premium persists, it complicates the ‘easy disinflation’ narrative and makes central banks stay cautious longer.

Fourth, watch the commodity split. Some commodities are trading like the future is scarce supply and structural demand. Others are trading like demand is fragile and China is still a question mark. It is not ‘commodities up’ or ‘commodities down’, it’s pick your lane, then manage the volatility.

In Summary

January was a strong start for Australian equities, and the move felt earned. The market absorbed both inflation noise and global policy uncertainty without falling apart.

But the message from the data is clear. Inflation is still the boss fight. CPI at 3.8% with housing doing the damage is not a backdrop that allows anyone to get lazy about valuations.

The bulls have momentum and a supportive tape. The bears have inflation and the threat of higher-for-longer rates. The next move will come from the data, and the market will not wait politely for confirmation.

As always, don’t forget to check out our stock recommendations, CEO interviews and other articles at themarketsiq.com.

Happy investing