Morning Wrap: ASX 200 to edge higher, S&P 500 little changed but breadth turns bullish

ASX 200 futures are up 11pts (+0.13%) as of 8:30 am AEDT.

In a nutshell:

• Not the most exciting overnight session but plenty of moving pieces (soft US retail sales, strong earnings from world's largest chipmaker TSMC)

• Breadth was very strong, with Equal-weight S&P 500 up 0.79% vs. S&P 500 -0.21%

• Barrage of economic data overnight plus China GDP, retail sales, fixed asset investment and industrial production data due this afternoon

Let's dive in.

S&P 500 SESSION CHART

S&P 500 lower amid volatile price action (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks mostly lower amid choppy trade, struggling to extend yesterday’s rally that saw the S&P 500, Nasdaq and Russell record their best sessions since last November

• Breadth was positive as the Equal-weight S&P 500 outpaced the official benchmark by 100 bps

• Lots of moving pieces – Barrage of economic data including softer US retail sales, blowout Philly Fed manufacturing, higher US import and export prices, AI theme back in focus after strong earnings from TSMC, European luxury showing signs of life after Cartier beat earnings estimates  

• Well-received December CPI and PPI – But the market still cautious and uncertain over path of disinflation after recent lead indicators such as ISM Services prices paid index at 22-month high 

• Dealmakers worried that cross-border M&A will be hostage to the volatility of Trump diplomacy (FT)

STOCKS

• Citigroup continues with more job cuts amid cost reduction push (BBG)

• Microsoft CEO Nadella discusses AI and cybersecurity in meeting with Trump, Musk (BBG)

• Morgan Stanley shares rally 4% after its Q4 results exceeded Wall Street estimates (CNBC)

• Stellantis Q4 shipments down 9%, North America tumbles 28% amid inventory focus (RT)

• Target raised its Q4 sales forecast after more consumers turned into its stores, yet the company did not lift its profit outlook (CNBC) 

• TSMC reports record 57% Q4 profit growth on AI chip demand, guides to Q1 revenue between US$25-25.8bn or 3.9% above consensus (BBG)

CENTRAL BANKS

• Fed Beige Book shows optimism for 2025 though with tariff and immigration concerns (BBG)

• Fed officials say CPI data shows disinflation process on track (RT)

• BOJ officials see good chance of rate hike next week provided no surprises from Trump (BBG)

• BOK unexpectedly leaves interest rates unchanged amid concerns over exchange rate volatility (RT)

POLITICS & GEOPOLITICS

• Israeli cabinet delay approval of Gaza ceasefire deal after Israeli strikes kill 77 (RT)

• Canada prepares tariffs on US$105bn of US goods if Trump follows through on his tariff threat (BBG)

• China imposes provisional duties on US, Europe, Japan and Taiwan industrial plastics (RT)

ECONOMY

• US December retail sales up 0.4% MoM vs. 0.5% consensus, retail sales exited 2024 on solid ground, up 3.9% for the year (RT)

• US weekly jobless claims rise more-than-expected (217k vs. 213k consensus), labour market conditions still healthy (RT)

• UK November GDP misses estimates with risk of stagflation rising, industrial production declines 0.4% (BBG)

• Australian unemployment ticks 0.1 percentage point higher to 4.0%, labor market remains tight, odds of February rate cut ease (BBG)

• Japan wholesale inflation unchanged at 3.8% amid rising raw material costs (RT)

• US import prices tick higher for third straight month in December with food and fuel prices rising (RT)

ASX TODAY

• Aussie Broadband MD Phillip Britt to retire, effective 28-Feb, to remain on board and assume newly created Special Technical Adviser position (ABB)

• Latin Resources shareholders vote in favour of proposed acquisition by Pilbara Minerals, shares to be suspended on 22-Jan and scheme implemented on 4-Feb (LRS)

• Rio Tinto, Glencore discuss potential merger (BBG)

• Rio Tinto reports lowest annual iron ore shipments in two years, remains optimistic on global recovery (FT)

• Strike Energy CEO Stuart Nichols resigns, effective 14-Feb, Non-Executive Director Jill Hoffmann appointed acting CEO (STX)

• Telstra shareholder Tanarra Capital advocates for reconsideration of plan to securitise income from NBN (AFR)

WHAT TO WATCH TODAY

• Not a whole lot: Not the most exciting overnight session. But strong US market breadth, slightly weaker bond yields and US dollar should be a positive for local stocks.

BROKER MOVES

• Genesis Minerals downgraded to Neutral from Buy but target up to $3.00 from $2.80 (UBS)

• Northern Star Resources upgraded to Neutral from Underweight; target up to $15.80 from $13.10 (JARD)

• ResMed initiated Buy with $48.90 target (GS)

Stocks trading ex-dividend: 

• Fri 17 Jan: None

• Mon 20 Jan: None

• Tue 21 Jan: None

• Wed 22 Jan: Leo Lithium (LLL) – 31.29%

Other ASX corporate actions today: 

• Dividends paid: Bisalloy Steel Group (BIS) 

• Listing: None

• Earnings: None

• AGMs: None

Economic calendar (AEDT):

• 12:00 pm: China GDP Growth (Q4)

• 12:00 pm: China Industrial Production, Retail Sales, Fixed Asset Investment (Dec)

• 11:30 pm: US Building Permits, Housing Starts (DEC)