Morning Wrap: ASX 200 to edge higher, S&P 500 ends flat ahead of US CPI report

In a nutshell:

• A choppy and light volume session ahead of US CPI report tonight

• ASX also light on announcements and broker updates this morning

• Key funding updates from Arafura Resources and Macquarie

Let's dive in.

S&P 500 SESSION CHART

S&P 500 breakeven amid choppy trade (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished mostly higher but off best levels

• S&P 500 extended yesterday's gains while the Nasdaq continued to ease

• Small caps, defensives and rate-sensitive sectors led to the upside, tech and growth underperformed

• Relatively choppy session, with very light volume as the market gets ready for the all-important December CPI report tonight

• Today’s big story – Stocks responded positively to a cooler-than-expected US December Producer Price Index after last week’s strong jobs report and Fed minutes raised concerns about upside inflation risks

• Weaker demand for long-duration, investment grade bonds amid hawkish Fed repricing, says BofA (BBG)

• Dollar strength to continue on fewer rate cuts, tariff implementation, according to currency strategists (BBG)

STOCKS

• Eli Lilly shares dip 6.8% on disappointing Q4 results, Zepbound and Mounjaro revenues miss expectations (BBG)

• Meta planning to cut about 5% of lowest performers with intent of backfilling their roles (BBG)

• Meta, Google expected to be top beneficiaries of displaced ad dollars from TikTok ban (AX)

• Biggest semiconductor firms revising down capex estimates amid capacity glut, weaker EV and smartphone demand (NK)

• Apple, Samsung smartphone shipments declined in Q4 as China rivals expanded market share (RT)

CENTRAL BANKS

• BOJ's Himino says members to discuss rate hike next week (BBG)

• ECB's Rehn expects Eurozone rates to exit restrictive territory by mid-2025 (RT)

• ECB' Holzmann unsure about a January rate hike, citing setback for inflation (BBG)

POLITICS & GEOPOLITICS

• Trump preparing executive orders to boost fossil fuel production, roll back Biden energy, automobile policies (WSJ)

• Gaza ceasefire "breakthrough," with next 24 hours seen as pivotal (FT)

• China increasing scrutiny of exports by Apple and other US tech companies (NK)

• Canada's US ambassador says Trump tariffs will result in tit-for-tat retaliation (BBG)

ECONOMY

• US December headline Producer Price Index up 0.2% month-on-month (vs 0.3% consensus) and core PPI was unchanged month-on-month (vs 0.3% consensus) amid unchanged services prices 

• Australian consumer confidence falls amid economic concerns but consumers remain less pessimistic than a year ago and forward looking measures were more stable (BBG)

ASX TODAY

• Arafura Resources to receive $200 million in unsecured convertible notes from the National Reconstruction Fund (AFR)

• Auckland International Airport reports December traffic, total monthly passengers up 3.0% year-on-year to 1.77m (AIA)

• Macquarie Asset Management to fund up to $5.0 billion for Applied Digital’s high-performance computing campus (RT)

• Yancoal CEO David James Moult resigns to devote more time to his other business engagements, active duties ceased on Tuesday 14 Jan (YAL)

WHAT TO WATCH TODAY

• Gold: Gold Miners ETF ticked 2.6% higher on the cooler-than-expected PPI data. Tonight's US CPI will be another major catalyst for bullion prices

• Ingenia Communities: Late-arvo announcement guided FY25 EBIT of $162-165m vs. prior target $148-155m and $144.8m consensus (~8% upgrade at midpoint) and EPS upgrade to 29-30 cents vs. prior 24.4-25.6 cents (~18% upgrade) . Stock rallied 15.0% but will be interesting to see if more buying kicks in given the timing of the announcement 

BROKER MOVES

• Guzman y Gomez upgraded to Neutral from Sell; target up to $40 from $37 (UBS)

Stocks trading ex-dividend: 

• Wed 15 Jan: Tower (TWR) – 4.28%

• Thu 16 – Fri 17 Jan: None

Other ASX corporate actions today: 

• Dividends paid: None

• Listing: None

• Earnings: None

• AGMs: None

Economic calendar (AEDT):

• 5:00 pm: UK Inflation (Dec)

• 7:00 pm: Germany GDP (Q4)

• 11:30 pm: US Inflation (Dec)