United States
Wall Street pushed closer to fresh records overnight as optimism around corporate earnings continued to outweigh softer economic data. The S&P 500 rose 0.5%, extending its winning streak to five sessions and trading just shy of the 7,000 level. The Nasdaq 100 climbed 1% ahead of a heavy slate of earnings from large technology companies, while the Dow Jones Industrial Average slipped 0.9%, dragged lower by weakness in healthcare stocks.
Insurers were under pressure after UnitedHealth forecast a decline in revenue for 2026, marking its first annual contraction in more than three decades. That weighed heavily on the Dow and followed news that US policymakers are considering holding payments to private Medicare plans flat next year. In contrast, transport stocks found support after United Parcel Service delivered a positive full-year outlook, even as it flagged further job cuts as part of its cost-reduction strategy.
Bond markets were relatively subdued ahead of the Federal Reserve’s policy decision, due early Thursday morning Australian time. The yield on 10-year US Treasuries edged up two basis points to 4.23%, while two-year yields dipped slightly, reflecting expectations that the central bank will hold rates steady. Equity markets largely looked through a sharp fall in consumer confidence, which dropped to its lowest level since 2014, signalling growing caution among US households.
Currency markets told a clearer story. The US dollar slid 0.7% on a broad measure, falling toward its lowest level in almost four years. The move was reinforced by strength in the Japanese yen, which rose 0.9% after renewed focus on potential policy coordination to limit excessive currency moves. Bitcoin was little changed, hovering around US$88,000, while ether outperformed with a 1.7% gain.
Europe
European shares closed higher as trade and earnings developments helped stabilise sentiment after last week’s volatility. The Stoxx Europe 600 index added 0.6%, supported by news that India and the European Union had reached a long-awaited free trade agreement. The deal capped nearly two decades of negotiations and came at a time when trade relations with the United States remain strained.
Banks were among the strongest performers, with financial stocks benefiting from improved confidence and selective earnings strength. Media and auto stocks lagged the broader market. In individual moves, Puma shares jumped after China’s Anta Sports agreed to buy a 29% stake, while Swiss pharmaceutical group Siegfried surged following acquisitions in the US and Australia.
Overall, European markets continued a gradual recovery as investors turned their attention to earnings and the upcoming Federal Reserve decision. Expectations for profit growth remain modest, with analysts forecasting a low single-digit increase in fourth-quarter earnings across the region. Bond markets were steady, with Germany’s 10-year yield little changed at 2.87% and UK gilt yields edging higher to 4.52%.
Australia
Australian shares are set to open higher, building on a strong local session that saw the S&P/ASX 200 close at a three-month high. Futures point to a gain of around 0.5%, following the positive lead from Wall Street and ongoing strength in commodity prices. The local market climbed 0.9% on Tuesday, led by materials and communications stocks, with nine of the 11 sectors finishing in the green.
Resources dominated trading as gold and silver prices hit record levels. BHP rose 2.7%, reclaiming its position as Australia’s most valuable listed company, while other miners such as Rio Tinto and Capstone Copper also posted solid gains. Energy stocks were mixed, though Santos found support after shipping its first LNG cargo from the delayed Barossa project.
Interest rate expectations remain a key focus. Money markets are pricing a growing chance that the Reserve Bank of Australia could lift the cash rate to 3.85% at its February meeting, following strong employment data. Attention now turns to December quarter inflation figures, due Wednesday, which are expected to show underlying price pressures still running above the RBA’s target band. Expectations are for headline inflation to have risen 0.6% in the final quarter of 2025, while a core reading which excludes certain volatile items is expected to have risen 0.9%.
Commodities and currencies
Commodity markets were active overnight, with energy and precious metals leading gains. West Texas Intermediate crude rose 2.2% to just under US$62 a barrel, while Brent crude jumped 2.7% to US$67.34 as traders assessed supply conditions and broader risk appetite. Iron ore was little changed, easing 0.1% to around US$103.50 a tonne.
Gold continued its remarkable run, climbing as much as 2.6% to trade above US$5,100 an ounce before settling slightly lower. The rally in bullion has been a defining feature of early 2026, underpinned by a weaker US dollar and strong investor demand for hard assets. Silver was more volatile, falling sharply after recent outsized gains.
In currency markets, the Australian dollar surged alongside other major currencies as the US dollar weakened. The Aussie was trading near US69.80¢ overnight, putting the psychologically important US70¢ level firmly in sight and marking one of its strongest starts to a year in recent memory. The euro rose 0.9% to US$1.198, sterling gained 0.7% to US$1.378, and the yen strengthened to around 152.7 per US dollar. The broad retreat in the greenback has been a central theme across global markets, influencing both commodity prices and capital flows.
Economic Calendar
AU:
- Inflation (MoM Dec) 11:30
- Inflation (QoQ Q4) 11:30
US:
- Consumer Confidence (MoM Jan) 02:00
- Fed Rate Decision 06:00
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
