Well, we’re into the second half of January now, and markets are almost back to normal transmission after the holidays.
Aussie shares are expected to recover some of yesterday’s steep losses, with oil prices surging above a four-month high and the Australian dollar continuing to hover near a five-year low of 61.5 US cents.
Fed inclined to be hawkish
Wall Street closed mixed on Monday as bond yields surged to multi-month highs following robust payroll jobs data, which only increases the likelihood of the Fed being hawkish on rates.
At the close, the Dow Jones had added 359 points (+0.9%), the S&P 500 had risen slightly (+0.2%) and the Nasdaq had fallen 73.5 points (-0.4%).
A tech sell-off dragged the Nasdaq to a one-month low, with Nvidia (-2.0%) and Micron Technology (NASDAQ:MU) (-4.3%) hit by tighter US export restrictions on artificial intelligence chip technology.
Healthcare gains bolstered the Dow Jones, with UnitedHealth Group (NYSE:UNH) (+3.9%), CVS Health (NYSE:CVS) (+7.3%) and Humana (NYSE:NYSE:HUM) (+6.8%) rallying on Medicare Advantage reimbursement rate increases for 2026.
That said, Moderna (NASDAQ:MRNA) (-16.8%) tumbled after slashing its 2025 sales forecast by US$1 billion.
US bond yields climbed, with the 10-year Treasury yield rising to 4.79% after touching a 14-month high of 4.799%. The two-year Treasury yield held steady at 4.39%.
European markets declined amid surging bond yields and a stronger US dollar.
Germany's 10-year bond yield hit 2.612%, its highest level since July 2024, driving declines in technology (-1.2%), real estate (-1.3%) and healthcare (-1.2%).
The FTSEurofirst 300 index fell 0.6% and the UK FTSE 100 dipped 0.3%.
Currencies and commodities
The US dollar surged to a two-year high against other major currencies, with the Euro trading near US$1.0220, the Aussie dollar stuck around 61.60 US cents and the yen weakening to JPY157.65 per US dollar.
Brent crude gained 1.6% to US$81.01 a barrel, while US Nymex crude rose 2.9% to US$78.82 a barrel.
Oil markets were reacting to US sanctions on Russia's energy sector, which could shift demand to alternative suppliers in India and China.
Gold futures fell 1.3% to US$2,678.60 an ounce, pressured by a soaring US dollar and expectations of cautious Fed rate cuts. Spot gold was near US$2,660 an ounce.
Iron ore futures rose 0.6% to US$98.72 a tonne, buoyed by China's central bank's commitment to maintain ample liquidity and adopt moderately loose monetary policy, lifting investor sentiment.
Copper futures climbed 0.5%, and aluminium added 0.8%, supported by expectations of stronger global demand, particularly in China.
Market snapshot
- ASX SPI futures: +0.4% to 8,202 points.
- ASX 200 (Monday close): -1.2% to 8,192 points.
- Australian dollar: +0.2% to 61.5 US cents.
- Wall Street: Dow Jones (+0.7%), S&P 500 (flat), Nasdaq (-0.7%).
- Europe: FTSE (-0.3%), DAX (-0.4%), Stoxx 600 (-0.6%).
- Spot gold: -1.2% to $US2,659/ounce.
- Brent crude: +1.8% to $US81.16/barrel.
- Iron ore: +0.4% to $US99.35/tonne.
- Bitcoin: -2.4% to $US92,348.
Source: ABC
On the horizon
In Australia, consumer confidence surveys are scheduled and shares of Premier Investments trade ex-dividend.
In the US, market focus shifts to the release of the Producer Price Index (PPI) and the NFIB small business optimism index.