Markets Overview

  • ASX SPI 200 futures up 0.7% to 8,436.00
  • Dow Average up 0.5% to 44,790.36
  • Aussie up 0.5% to 0.6285 per US$
  • US 10-year yield fell 9.3bps to 4.4181%
  • Australia 3-year bond yield fell 3 bps to 3.75%
  • Australia 10-year bond yield fell 5.9 bps to 4.36%
  • Gold spot up 0.7% to $2,863.39
  • Brent futures down 2.0% to $74.71/bbl

Economic Events

  • 10:30: (AU) Australia to Sell A$1.5 Billion 126-Day Bills
  • 10:30: (AU) Australia to Sell A$1 Billion 168-Day Bills
  • 10:30: (AU) Australia to Sell A$1.5 Billion 105-Day Bills
  • 11:30: (AU) Dec. Imports MoM, prior 1.7%
  • 11:30: (AU) Dec. Exports MoM, prior 4.8%
  • 11:30: (AU) Dec. International Trade Balance, est. A$6.5b, prior A$7.08b

Stocks rose as gains in most major industries overshadowed underwhelming earnings from some tech heavyweights. Treasury yields reached 2025 lows after a weak reading on US services.

About 350 companies in the S&P 500 climbed. Nvidia Corp. led gains in chipmakers. But a gauge of the “Magnificent Seven” megacaps sank 1.5% as Alphabet Inc.’s results drove Google’s parent to its worst plunge in over a year. Advanced Micro Devices Inc. tumbled 6.3% on a disappointing outlook. In late hours, Qualcomm Inc. rose on a bullish sales forecast. Arm Holdings Plc gave a tepid estimate. Ford Motor Co. warned that profit may fall.

Wall Street has been whipsawed by uneven economic data, trade tensions and questions on whether the billions of dollars spent on artificial intelligence will start to pay off. To Mark Hackett at Nationwide, the flurry of market-moving headlines in the first few weeks of 2025 serves as a stark reminder to investors that volatility can emerge unexpectedly.

Last week, DeepSeek’s emergence as an AI threat wiped half a trillion dollars of value off Nvidia. Last night, Alphabet’s results sparked questions about its capital expenditures from the cohort of big techs that has powered the bull market. While the “Magnificent Seven” have made up more than half of the S&P 500’s gains over the past two years, their profit growth is decelerating.

“Within the US stock market, we like large caps — particularly S&P 493 companies — which should expand profit margins as they adopt productivity-boosting technologies,” said Ed Yardeni, founder of his namesake research firm. “We do not believe the Mag Seven are grossly overvalued. However, we see room for the S&P 493 to outperform.”

The S&P 500 rose 0.4%. The Nasdaq 100 added 0.4%. The Dow Jones Industrial Average gained 0.7%. UnitedHealth Group Inc. pared losses to 1% after saying it contacted the US Securities and Exchange Commission with concerns about investor Bill Ackman’s since-deleted X post suggesting the company overstated profits. Uber Technologies Inc. slid 7.6% on a weak gross bookings guidance.

The yield on 10-year Treasuries declined nine basis points to 4.42%. The Bloomberg Dollar Spot Index fell 0.2%.

Other News

Investor demand for Australia’s new bond surged to a record as central bank policy easing, moderating inflation and trade tensions spurred a global rush for fresh issuance.

Australia attracted A$83 billion ($52 billion) worth of bids at the final clearing price for a new bond maturing in March 2036, the Australian Office for Financial Management said in a statement Wednesday. That eclipsed the previous A$66 billion record the nation notched in September 2020.

Australia joins the likes of France, Spain and the UK for record orders this year as investors capitalize on typically higher yields offered in the primary market. That’s despite bonds being under pressure amid fiscal issues in Europe and concerns the Federal Reserve may not be able to ease policy as much as hoped.

“While there are a lot of bonds to be sold, at these yield levels, clearly there are still willing buyers out there,” said Stephen Spratt, a rates strategist at Societe Generale in Hong Kong. “With inflation back from red hot levels and most central banks actively easing, many investors are happy to use the liquidity windows offered by these syndications to add duration to portfolios.”

In Australia, markets have almost fully priced an interest rate cut of 25 basis points by the Reserve Bank this month as inflation continues to moderate, according to swaps data compiled by Bloomberg. Australia’s economy, with its close trade links to China, is also vulnerable should there be a rapid escalation in trade tensions between the US and Beijing.

“The likelihood of the RBA to kick start an easing cycle certainly helps as does US-China tariff risks” for spurring the syndication demand, said Prashant Newnaha, a senior rates strategist at TD Securities in Singapore. “Since tariff concerns have escalated, the market has taken the view it poses a downside risk to trade and growth, helping the long end outperform.”