United States
Wall Street extended its January gains overnight as investors positioned ahead of what promises to be the busiest week of the earnings season, though the real fireworks were happening elsewhere in markets.
The S&P 500 rose 0.5 per cent, while the Dow Jones Industrial Average advanced 0.7 per cent to 49,419. The tech-heavy Nasdaq added 0.6 per cent as enthusiasm built ahead of results from four of the Magnificent Seven megacaps later this week. Companies accounting for roughly a third of the benchmark’s market capitalisation are scheduled to report, with Microsoft, Meta, Tesla and Apple all on the docket.
The Federal Reserve’s policy meeting on Wednesday looms as another focal point, though markets are pricing in no change to interest rates. Following three cuts at the end of 2025, the central bank appears comfortable keeping policy on hold as inflation remains above target despite cooling substantially from its 2022 peak. The bigger question mark surrounds Fed Chair Jerome Powell’s press conference, which may touch on the institution’s independence amid ongoing tensions with the White House.
JPMorgan noted that forward guidance from early reporters has topped expectations at roughly half of S&P 500 companies that have provided an outlook for 2026. Since most of these firms sit outside the technology sector, it suggests earnings growth is broadening across other industries this year. Goldman Sachs observed that its risk appetite indicator has reached its highest level since 2021, sitting in the 98th percentile of readings since 1991.
After the closing bell, health insurers including UnitedHealth, CVS Health and Humana tumbled following reports that the US government will hold payments to private Medicare plans flat next year.
On the corporate front, Nvidia invested an additional $US2 billion in CoreWeave to accelerate efforts adding more than five gigawatts of AI computing capacity by 2030. Microsoft is rolling out its second-generation artificial intelligence chip as part of a push to power its services more efficiently. GameStop rallied after Michael Burry, the investor immortalised in The Big Short, disclosed he has been accumulating shares.
Europe
European equities edged higher as mining stocks tracked a rally in commodity prices, though gains were tempered by weakness in travel and industrial names.
The Stoxx 600 rose 0.2 per cent, with basic resources the standout sector, climbing 1.6 per cent as investors rotated into hard assets amid a weakening greenback and growing unease over currencies and global fiscal risks. Rio Tinto gained 1.5 per cent to a record closing level, while Anglo American added 2.1 per cent and Polish copper producer KGHM surged 8.4 per cent.
Utilities were the next best performer, advancing 1.2 per cent, with National Grid touching a record close. Wind turbine manufacturer Vestas jumped 7.3 per cent after being placed on positive catalyst watch and following announcements from several European leaders about new wind investments in the North Sea.
Banks also impressed, rising 1.0 per cent, with Santander, HSBC and BBVA among the leaders.
Travel and leisure stocks were the session’s laggards, falling 0.9 per cent as flight disruptions in the US and Middle East weighed on sentiment. Ryanair shed 2.3 per cent after its guidance implied a conservative fourth quarter. Industrials slipped 0.5 per cent, with Airbus warning staff to prepare for geopolitical risks and potential new crises. Automotive stocks dropped 0.7 per cent after Volkswagen confirmed its plans for a possible Audi factory in the US have stalled as Trump’s tariffs weigh and talks for local incentives have failed to yield results.
Australia
Australian shares are poised to open sharply higher after a three-day break, with S&P/ASX 200 futures pointing to a gain of 0.6 per cent, or 52 points, to around 8,880.
Local miners should find support from the overnight rally in metal prices and strength in their European counterparts. BHP’s American depositary receipts gained 0.6 per cent overnight, while Rio Tinto’s ADRs edged up 0.1 per cent.
The battle for the ASX’s top spot continues, with BHP now just 1.6 per cent away from toppling Commonwealth Bank from the number one position by market capitalisation following an impressive 30 per cent rally over six months.
Broker activity was busy, with Morgan Stanley upgrading Lottery Corp to overweight while cutting Ramsay Health to underweight and Tabcorp to underweight. Citi downgraded Sonic Healthcare to sell.
NAB will release its December business confidence and conditions reports at 11.30am AEDT.
Bond yields were steady, with the three-year at 4.26 per cent and the ten-year at 4.82 per cent.
Commodities and currencies
The precious metals complex delivered historic moves overnight. Gold smashed through $US5000 an ounce for the first time, briefly touching $US5100 before settling around $US5043. Silver’s rally has been even more spectacular, topping $US114 an ounce. TD Securities sees potential for transitory highs of $US5400 for gold and $US118 for silver in the first half of this year.
Natural gas futures exploded 29 per cent higher to $US6.80 per million British thermal units after an Arctic blast knocked an estimated 12 per cent of US production offline. The contract has surged 119 per cent over just five sessions.
The US dollar tumbled to its lowest level since 2022 on speculation Washington could coordinate intervention with Japan to support the yen, which rallied 1.0 per cent to a two-month high around 153.89 per dollar.
The Australian dollar jumped 0.4 per cent to US69.18 cents, within striking distance of a three-year high. A break above US69.42 cents would be the strongest since 2023.
Oil prices steadied, with Brent crude slipping 0.4 per cent to $US65.61 a barrel. Iron ore eased 1.0 per cent to $US103.55 a tonne.
Bitcoin rose 1.7 per cent to $US87,815.
Economic Calendar
US:
- Conf. Board Consumer Confidence Jan 02:00
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
