Why the ASX 200 is pushing higher as rate hike fears grow

The S&P/ASX 200 Index (ASX: XJO) is back in positive territory on Friday.

At the time of writing, the benchmark index is up 0.26% to 9,061 points after closing 0.98% lower at 9,038 points on Thursday.

That leaves the market around 2.5% below its record high of 9,296 points reached earlier this month, although it is still holding above the 9,000 mark.

So, what’s helping the ASX 200 move higher today?

Tech stocks are leading the rebound

Technology shares are doing much of the heavy lifting today after a strong night on Wall Street.

Nvidia Corp (NASDAQ: NVDA) shares jumped 8.7% after investors welcomed the company’s latest quarterly results and outlook. The move added around US$442 billion to the chipmaker’s market value in a single session.

That helped push the Nasdaq Composite Index (NASDAQ: .IXIC) 1.6% higher, while the S&P 500 Index (SP: .INX) gained 0.7%, with technology easily the strongest-performing sector.

That strength has flowed through to the local market, with some of the ASX’s biggest tech shares among Friday’s strongest performers.

Xero Ltd (ASX: XRO) shares are up 8.28% to $88.50, and Pro Medicus Ltd (ASX: PME) shares have climbed 3.93% to $186.28.

The banks are also lending a hand. Commonwealth Bank of Australia (ASX: CBA) shares are up 0.87% to $156.31, while National Australia Bank Ltd (ASX: NAB) shares have risen 1.05% to $38.38.

The gains are fairly broad across the market as well, with 103 ASX 200 companies trading higher, 89 lower, and 8 unchanged.

There are still a few big stocks moving the other way though. Rio Tinto Ltd (ASX: RIO) shares are down 1.28% to $176.41, Woolworths Group Ltd (ASX: WOW) shares are 1.19% lower at $39.08, and CSL Ltd (ASX: CSL) shares have fallen 1.08% to $172.01.

Rate hike concerns haven’t disappeared

Today’s rise doesn’t mean investors have stopped worrying about interest rates.

The latest ABS figures showed annual inflation eased to 3.5% in July, although trimmed mean inflation remained higher at 3.6%.

Household spending also jumped, rising 1.1% in July and 7% over the year. That has kept the possibility of another RBA rate hike on the table for now.

Westpac chief economist Luci Ellis said the latest inflation numbers have increased the risk of another hike, but she doesn’t think the RBA has seen enough yet to make that call.

She sees November as a more likely time for a move than September, with the RBA still set to receive more data on jobs, spending, and inflation before deciding what comes next.

What should investors watch?

The ASX 200 has found some support after falling for 2 straight sessions, although it is still sitting below the 9,296-point record high reached on 6 August.

From here, investors will be watching to see whether today’s tech-led rebound can build into something broader and carry into next week.

Interest rates are still likely to have the biggest say in where the market heads next.