Which Sectors will Lead the All Ords Rise in 2025?

After the ASX’s strong performance in 2024, optimism is building as we shift our focus to what 2025 has in store. The New Year brings renewed energy, exciting opportunities, and the promise of growth. But the big question is: will the market maintain its upward momentum, and which sectors will take the lead? Let’s explore the key trends and opportunities that could shape the year ahead.

Tech’s Selective Surge

The tech sector is still riding high, but 2025 calls for sharper focus. The days of broad rallies are over—this year, it’s all about picking the stars among the crowd. Many tech favourites have already hit lofty valuations, so the real opportunities lie in quality businesses with robust earnings growth and groundbreaking innovations. Not every tech name will shine in 2025; the winners will be those who redefine the game.

Rate Cuts Could Revitalise Real Estate and Financials

All eyes are on the Reserve Bank of Australia, which is expected to cut interest rates this year. While May is the most likely timing, there’s chatter about a potential February move. Two rate cuts could deliver a major boost, making borrowing cheaper, igniting the property market, and enhancing bank profitability. However, the RBA won’t move without clear signs of economic cooling—its cautious stance remains tethered to a strong labour market.

Materials Sector Set to Shine

Global dynamics are driving a surge in demand for resources, and the materials sector is poised to benefit. India’s rapid growth, China’s stimulus measures, and Trump’s pro-industry policies are fuelling optimism. Yet, it’s not without risks—U.S. tariffs on Chinese goods like lithium batteries could weigh on Australian exports so keep a close watch on these macro factors as you navigate the sector.

Energy’s Comeback Story

After years as the market’s underdog, the energy sector could surprise us in 2025. The expansion of AI and other energy-intensive technologies is driving renewed demand for traditional sources like coal and gas, even as renewables continue to gain traction. Geopolitical factors, OPEC decisions, and shifts in U.S. energy policy will add to the intrigue, making energy the wildcard to watch this year.

With opportunities across sectors and plenty of excitement ahead, 2025 promises to be a year of transformation and growth. Stay sharp, stay informed, and get ready to make this year your best investing year yet!

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

The best-performing sectors included Energy up 3.19 per cent, followed by Materials, up 2.63 per cent and Real Estate, up 1.66 per cent. The worst-performing sectors included Information Technology, down 3.12 per cent, followed by Healthcare, down 1.91 per cent and Consumer Discretionary, down 1.17 per cent.

The best performing stocks in the ASX top 100 included Telix Pharmaceuticals, up 10.84 per cent, followed by Pilbara Minerals, up 9.13 per cent and Paladin Energy, up 9.10 per cent. The worst-performing stocks included HUB24 Limited, down 9.41 per cent, followed by Pro Medicus, down 7.33 per cent, and WiseTech Global, down 6.73 per cent.

What's next for the Australian stock market?

Last week, the All Ordinaries Index demonstrated resilience as buyers stepped in decisively on Thursday, reversing early selling pressure and helping the index finish the week with a slight gain of just under half a per cent. The week saw a tug-of-war in market sentiment, with the index dropping over 1 per cent by Wednesday before finding support around the 8,400 level, where renewed buying pushed it back into positive territory.

The 8,400 level is particularly noteworthy, as it has been tested nine times on a weekly basis since mid-September. This consistent activity highlights strong buying interest at this level, suggesting that it serves as a significant support zone. However, it also points to the market finding comfort in this range, raising the possibility of a return to the sideways movement seen from September to November last year.

Despite this, the overarching trend remains bullish. The strong rebound from 8,400 has shifted focus to the 8,600 level. An earlier attempt to breach the 8,600 level was met with selling pressure a few weeks ago, but if the index manages to break through on the next try, a test of the all-time high appears likely. Should that high be surpassed, the potential for the index to reach 9,000 points this year comes into play.

In fact, if the All Ordinaries continues its strong trajectory from 2024, a move to 9,200 could be entirely achievable based on historical averages. Of course, markets can be unpredictable, but as an investor, remember you’re not trading the index directly—you’re picking individual stocks. Therefore, use the broader market’s momentum to your advantage, and always protect your positions with well-placed stop losses in case the tide turns.

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.