United States
It was a classic Trump market whiplash on Wall Street, with equities staging a powerful relief rally after the President softened his stance on Greenland following a meeting with NATO Secretary General Mark Rutte at the World Economic Forum in Davos.
The S&P 500 surged 1.2 per cent in its strongest session since November, returning the benchmark to positive territory for 2026 after Tuesday’s sharp selloff. The Dow Jones Industrial Average climbed 1.2 per cent to 49,245, while the tech-heavy Nasdaq 100 jumped 1.4 per cent. More than 400 stocks in the S&P 500 finished in the green.
Small caps continued their impressive run, with the Russell 2000 outperforming the broader market for a thirteenth consecutive session. Energy shares reached fresh all-time highs as the sector led gains across Wall Street.
Trump’s comments from Davos provided the catalyst for the turnaround. The President ruled out the use of military force to acquire Greenland and announced what he described as a framework agreement with NATO on the Arctic region. The shift marked a stark reversal from his earlier posturing, which had unsettled markets and prompted concerns about a fresh transatlantic trade dispute.
Adding to the positive sentiment, US Supreme Court justices appeared sceptical of Trump’s attempt to remove Federal Reserve Governor Lisa Cook over unproven mortgage fraud allegations. Observers noted the hearing seemed to go well for the Fed’s independence, easing concerns about potential political interference in monetary policy.
Treasury markets also rallied, with the 10-year yield falling four basis points to 4.25 per cent. A $13 billion auction of 20-year bonds drew solid demand.
On the corporate front, Netflix shares tumbled after the streaming giant issued a disappointing earnings forecast, citing higher programming costs as it works to complete its $82.7 billion acquisition of Warner Bros. Discovery. Apple announced plans to transform Siri into a full artificial intelligence chatbot later this year, positioning the iPhone maker more directly against OpenAI and Google in the generative AI race.
United Airlines cautioned that geopolitical tensions could disrupt what management described as a strong start to the year, while Johnson & Johnson dropped after losing a court battle over expert testimony linking its withdrawn baby powder products to cancer.
Europe
European equities recovered from early losses to finish broadly flat, with the Stoxx 600 erasing declines after Trump’s conciliatory remarks on Greenland.
Mining stocks were the standout performers, with the basic resources sector surging 3.7 per cent to its highest level since 2022. Rio Tinto led the charge with a 5.2 per cent gain after production figures exceeded expectations, while Anglo American advanced 4.9 per cent and Glencore added 3.7 per cent. The rally was underpinned by strength in copper and gold prices.
The automotive sector rebounded 1.1 per cent from three-month lows, with Mercedes-Benz, Michelin and Stellantis among the top gainers. Renault rose 3.3 per cent after announcing plans to reintegrate its Ampere electric vehicle unit, reversing a strategy that had struggled amid weaker than expected EV demand.
Luxury stocks snapped a seven-day losing streak after Burberry delivered a stronger than expected sales update, with the British retailer benefiting from renewed demand in China.
Insurance was the worst performing sector, sliding 1.7 per cent after several broker downgrades weighed on sentiment. Food stocks also struggled, dragged lower by Danone’s 8.4 per cent plunge amid concerns about a tainted infant formula recall.
Australia
Australian shares are set for a solid start to Thursday’s session, with S&P/ASX 200 futures pointing 0.5 per cent higher to around 8,799.
A heavy slate of quarterly production reports will dominate the local agenda, with Fortescue, Northern Star, South32, Santos and Sandfire among the companies updating the market.
Northern Star has already flagged a softer quarter, cutting full year guidance to 1.6 to 1.7 million ounces of gold sold, down from earlier expectations of 1.7 to 1.85 million ounces. The miner cited a crusher failure at KCGM and unplanned mill downtime at Thunderbox among the issues that impacted output.
Regis Resources reported record cash generation in the December quarter, with gold sales of 99,500 ounces generating $641 million in revenue. Cash and bullion increased by $255 million to $930 million.
Broker activity was busy, with Macquarie upgrading NAB to outperform and UBS lifting Macquarie Group to buy. Goldman Sachs reinstated coverage of Sigma Healthcare with a buy rating ahead of its merger with Chemist Warehouse.
December employment data, due at 11.30am AEDT, will be closely watched. Economists expect the economy added around 40,000 jobs, with the unemployment rate holding steady at 4.3 per cent.
Commodities and currencies
Gold pared gains after touching fresh records above $4,800 an ounce earlier in the session, as haven demand eased following Trump’s de-escalation on Greenland. The precious metal settled 0.4 per cent higher at around $4,783 an ounce.
Copper markets experienced dramatic volatility, with spot prices briefly surging to a sharp premium over futures as near-term supply concerns emerged. The Tom/Next spread spiked to around $100 a tonne before rapidly narrowing.
Oil prices edged higher, with Brent crude gaining 0.6 per cent to $65.28 a barrel and West Texas Intermediate adding 0.6 per cent to $60.71.
The Australian dollar strengthened 0.4 per cent to 67.62 US cents, benefiting from both the improved risk appetite and firmer commodity prices. The euro slipped 0.3 per cent to $1.1691 against the greenback.
Iron ore eased 0.6 per cent to $103.30 a tonne.
Bitcoin rose 0.7 per cent to $89,966, with ethereum gaining 1.1 per cent.
Economic Calendar
US:
- GDP Annualised QoQ 00:30
- Initial Jobless Claims 00:30
- Personal Income/Spending Nov 02:00
AU:
- Employment Change Dec 11:30
- Unemployment Rate Dec 11:30
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
