Morning Wrap: ASX 200 to rise, S&P 500 at all-time highs, Gold and silver prices extend rally

ASX 200 futures are up 48 pts (+0.53%) as of 8:30 am AEDT.

In a nutshell:

• Major US benchmarks mostly higher, with the S&P 500 at all-time highs and the Nasdaq within 0.5% record highs

• Defensives and small caps underperformed following a recent hot streak

• US Dollar Index tumbled 1.2% to the lowest since February 2022, the Aussie Dollar is now trading with a seven handle for the first time since 2023

• Gold and silver prices continued to surge, with gold nearing US$5,200 while silver recouped some of yesterday's intraday fade and back at US$112

Let's dive in.

S&P 500 SESSION CHART

S&P 500 higher, off best levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks mostly higher, closed off best levels

• Breadth was a little soft, with the Equal-weight S&P 500 (-0.15%) underperforming the cap-weighted index by 56 bps

• Big tech broadly higher, notably Amazon (+2.6%), Broadcom (+2.4%) and Microsoft (+2.1%) 

• Small caps lagged after ~13 sessions of outperformance

• Gold and silver options traders bet on further upside, despite vertical price charts and elevated volatility (BBG)

• EUR, GBP hit four year high against US dollar (FT)

• AUD rallies to near three year high as yield appeal grows (BBG)

• Retail investor participation up to ~20% of daily trading volume, up from low single digits pre-Covid (CNBC)

• Citigroup expects spot silver prices to hit a record US$150 (BBG)

• Bond investors see extended Fed pause, shift into riskier trades (RT)

• Canada's IPO market expected to heat up, IPO pipeline strongest since 2021 (RT)

• Big Tech borrowing spree fuels concerns of AI-driven concentration in US investment grade credit markets (FT )

• US natural gas futures spike to three-year high as winter storm hits output, drives up heating demand (FT)

STOCKS

• GM expects to ramp domestic auto production, overtake Ford as top assembler of vehicles in US (CNBC)

• UPS to cut a further 30,000 jobs as it winds down Amazon partnership (CNBC)

• Boeing revenue surges as turnaround gains momentum, free cash flow doubles expectations (CNBC)

• Pinterest to cut ~15% of staff, boost AI investments (TC)

• Microsoft reveals second generation of its AI chip in effort to bolster cloud business (BBG)

• Meta to trial subscription models on Instagram, Facebook and WhatsApp in coming months (CNBC)

• ASML dominates advanced chipmaking with laser-based lithography machines essential for AI chip production (RT)

• China's Anta Sports buys 29% stake in Puma for €1.5bn to expand athleisure portfolio (BBG)

• Baidu merges two consumer app units into a new AI-focused division to accelerate consumer AI push (SCMP)

TARIFFS

• Trump plans to hike tariffs on South Korea to 25% from 15%, blaming parliament for not enacting trade deal (BBG)

• India and EU set to conclude comprehensive trade deal (RT)

• China-Japan tensions fueling rise in gallium, raising prices of key material in semiconductor industry (NK)

CENTRAL BANKS

• Fed set to pause, though unclear how long it will hold rates steady (NYT)

GEOPOLITICS

• Trump says Iran wants to make deal as armada arrives in region (AX)

• Israel expected to seek a new security deal from the US (FT)

• Denmark and Greenland leaders seek European support after US framework deal, visiting Berlin and Paris (BBG)

ECONOMY

• Prediction markets still indicating ~80% chance of an at least partial government shutdown this Saturday (WSJ)

• China industrial profits rose in 2025, thanks to anti-price‑war measures easing earnings pressure (CNBC)

• Australian business confidence and conditions strengthen but capacity constraints feeding into cost pressures (RT)

ASX TODAY

• ASX 200 to trade higher for a fourth straight session. The soaring Aussie dollar and resource backdrop will likely buoy the market higher, despite bond yields breaking out (Aussie 10-year gained 6 bps overnight to 4.87%, the highest since Nov-23)

• Long list of resource quarterlies, AZY, BCI, CRN, DVP, ELV, GGP, MEK, TLG, WA1, WAF and more have all reported this morning (will take a look at any interesting ones on the blog)

• Elementos holder Metals X increases stake to 19.99% from 17.87% (ELT)

WHAT TO WATCH TODAY

• Aussie dollar: The Aussie is trading with a seven handle for the first time since Feb-23. It's move against the US dollar has been fairly vertical, rallying from 66 cents to 70 cents in just seven sessions. Looking at some old Citi research from 2023, strong resource prices and commodity markets tend to go hand-in-hand with a high Aussie dollar, therefore Materials and Energy are the most significant beneficiaries. On the flip side, Healthcare and Staples face the most headwinds. A few specific names to watch for weakness include BXB, CSL and APA.

• Gold is ripping: Gold is up more than 3%, not far from US$5,200/oz. Silver also recouping the recent intraday pullback, up 8.1% overnight to US$112/oz. The Gold Miners ETF experienced a sizeable reversal overnight, closing 1.6% higher, up from a 3.3% dip in early trade.

BROKER MOVES

• Abacus Storage King REIT initiated with $1.70 target (BP)

• Alcoa downgraded to Equal-weight from Overweight but target up to US$64 from US$52 (MS)

• Karoon Energy downgraded to Underperform from Neutral; target cut to $1.50 from $1.65 (MQG)

• Ricegrowers initiated with $18.75 target (BP) 

Stocks trading ex-dividend: 

• Wed 28 Jan: None

• Thu 29 Jan: 360 Capital Mortgage REIT (TCF) – $0.05, CD Private Equity Fund I (CD1) – $0.05, CD Private Equity Fund II (CD2) – $0.38, CD Private Equity Fund III (CD3) – $0.04, EUROZ Hartleys Group Ltd (EZL) – $0.025, Gryphon Capital Income Trust (GCI) – $0.012, KKR Credit Income Fund (KKC) – $0.017, Perpetual Credit Income Trust (PCI) – $0.006

• Fri 30 Jan: Djerriwarrh Investments Ltd (DJW) – $0.072, MA Credit Income Trust (MA1) – $0.014

Other ASX corporate actions today:       

• Dividends paid: Metcash (MTS)

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEDT):

• 11:30 am: NAB Business Confidence (Dec)