Morning Wrap: ASX 200 to rise, S&P 500 claws back to breakeven, Gold and silver prices whipsaw

ASX 200 futures are up 23 pts (+0.25%) as of 8:30 am AEDT.

In a nutshell:

• Major US benchmarks mixed but finished well-above session lows

• S&P 500 (-0.13%) managed to reverse a 1.5% dip in early trade and on-track for modest weekly gains

• Microsoft shares (-9.9%) experience largest selloff since pandemic as Azure growth underwhelmed and AI capex sparked concerns

• Gold prices set to finish the session slightly lower but experienced an almost 10% trading range on Thursday (between US$5,097 and US$5,598)

Let's dive in.

S&P 500 SESSION CHART

S&P 500 reverses steep dip to close slightly lower (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks mixed but closed well-above intraday lows

• Breadth was slightly positive as the Equal-weight S&P 500 (+0.13%) outperformed the cap-weighted index by 26 bps

• S&P 500 managed to reverse the entirety of its 1.5% dip, Nasdaq finished lower but well-off its 2.6% intraday low

• Sizeable VIX reversal as well, closing at 16.87 vs. session high of 19.74

• Lots of moving parts, with semis soaring and software tumbling, commodity volatility driving concerns of unwinding crowded longs, rising geopolitical tensions surrounding Iran driving oil prices higher

• Investors punishing Big Tech stocks if AI spending fails to deliver (RT)

• Software company bonds under pressure amid AI concerns (BBG)

• Steep software selloff continues amid AI disruptions worries, IGV software ETF down 21% from recent high (CNBC)

• Gold and silver sharply reverse Thursday's rally as volatile metals trading continues (YF)

• Sales of US high-grade bonds hit $200bn, breaking YTD records (BBG)

• US dollar weakens as debasement trade returns, outweighing Bessent's affirmation of strong-greenback policy (BBG)

• Copper trading above US$14,000 for the first on record, posted largest gain in 16 years and up ~25% since the start of December, spike driven by speculative flows and record volumes on the Shanghai Futures Exchange (BBG)

• China said to scrap developer "three red lines" submissions reporting, lifting China property stocks (BBG)

STOCKS

• Microsoft shares dive 10.9pc, largest drop since 2020 amid record AI spending and softer cloud growth worry investors; margins narrow (BBG)

• Meta rallies 10.6pc as ad sales drive top line beat, guides capex above expectations, latest AI models released in coming months (RT)

• Tesla announces $2bn xAI investment, Cybercab production on track for 2026, plans to double capex in AI pivot (FT)

• Nvidia, Microsoft, Amazon in talks to invest up to $60bn in OpenAI (BBG)

• IBM revenue beats expectations, AI adoption drives growth in software segment, shares up 4.6pc (RT)

• Samsung posts record Q4 operating profit on sales of premium chips, announces $2.5B buyback (BBG)

• Samsung and SK Hynix to substantially raise capex amid AI demand (BBG)

• ServiceNow beats sales outlook but AI disruption fears linger, shares still dive 11.1pc (BBG)

• SAP shares tumble 16pc as cloud backlog disappoints as larger deals delay implementation; launches up to €10bn buyback program (RT)

• Deutsche Bank ends record profit year with higher trading income and new buyback amid money laundering probe (BBG)

• Southwest Airlines beats estimates, turnaround gains traction with new initiatives (BBG)

• H&M beats quarterly expectations as popular collections and strict cost controls boost profit (BBG)

• Amazon to cut 16,000 corporate positions to trim bureaucracy (BBG)

• Dow cutting approximately 4,500 jobs, using AI to boost operations (BBG)

• Glencore copper output falls 11% despite second-half recovery (RT)

TARIFFS

• India cuts duties on high-end European cars to 30% under new EU trade deal (RT)

CENTRAL BANKST

• Trump says he will reveal his Fed chair pick next week (RT)

• Fed signals no hurry to cut rates as strong growth and steady jobs persist (FT)

• Powell urges Fed successors to avoid electoral politics (RT)

• Sweden's Riksbank holds rates, sees recovery keeping inflation near target (BBG)

GEOPOLITICS

• Trump weighing major Iran strike after talks on curbing nuclear and ballistic missile program fail to make headway (CNN)

• Rubio says Venezuela's new leaders move closer to US, sees no immediate military action needed (RT)

• US and Denmark begin formal talks over Greenland (BBG)

• UK PM Starmer meets Xi seeking China ties reset, eyeing economic wins (RT)

ECONOMY

• China provinces cut 2026 growth targets, signaling national downgrade risk (BBG)

• Swiss exports to US hit record despite Trump-era tariffs (BBG)

• Germany downgrades 2026 and 2027 growth forecasts citing trade uncertainty and delayed policy effects (RT)

• UK vehicle production drops to 73-year low in 2025 amid disruptions, with recovery anticipated (BBC)

ASX TODAY

• ASX 200 set to trade higher after two slight down days, still plenty of quarterlies coming through. I'll cover any of interest on the blog (we called out some good ones on Thursday like OBM, ILU and WHC)

• BHP faces up to $2bn hit from China iron ore restrictions and widening discounts (BBG)

• Experience Co reports Q2 revenue up 1% year-on-year to $36.3m, EBITDA down 11% to $6.5m, January trading impacted by severe weather events in ANZ region (EXP) 

• Ganfeng Lithium disposes 32.2m shares in PLS Group for $160.2m, now holds 140.5m shares or 4.4% of the company (PLS)

• ResMed reports Q2 revenue growth of 11% to $1.4bn, gross margin up 320 bps to 61.8% and EPS of $2.81 vs. $2.74 ests, NYSE-listed shares up 1.2% after hours (RMD)

WHAT TO WATCH TODAY

• More software obliteration: Every single US software stock that has reported earnings has been obliterated (SAP, MSFT, NOW, ROP, MANH etc. all down 3-14%). While most local names are deeply oversold, its hard to argue against this downward momentum (and the fact that most names are still pretty expensive, even after falling 30-50%).

• Gold, silver volatility: Very, very bumpy overnight session for most commodities (e.g. gold closing flattish vs. intraday high of +3.3% to US$5,598/oz and low of -5.8% to US$5,097/oz). We're at a point where the rate of advance is unsustainable, and any further gains will introduce even more volatility. Still, there are plenty of bulls (especially retail), buying into weakness. Earlier this week, silver traded almost as much dollar volume as the S&P 500. Overnight Gold and Silver Miner ETFs finished 3.7% and 3.3% lower respectively, off worst levels.

BROKER MOVES

• Iluka Resources upgraded to Outperform from Neutral; however target lowered to $6.50 from $7.10 (MQG)

• MinRes upgraded to Outperform from Neutral; target up to $70 from $56 (MQG)

• Perpetual downgraded to Neutral from Overweight; target cut to $20 from $22.50 (JPM)

• Whitehaven Coal downgraded to Sell from Hold; target remains $8.40 (BP)

• Whitehaven Coal downgraded to Neutral from Outperform; target up to $10.00 from $8.75 (MQG)

Stocks trading ex-dividend: 

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

• Mon 2 Feb: Amcil – $0.01, Australian Foundation Investment Company – $0.145, La Trobe Private Credit Fund – $0.012, Pengana Global Private Credit Trust – $0.013, Revolution Private Credit Income Trust – $0.013

• Tue 3 Feb: None

• Wed 4 Feb: None

Other ASX corporate actions today:       

• Dividends paid: Centuria Industrial REIT (CIP), Centuria Office REIT (COF), RAM Essential Services Property Fund (REP), Region Group (RGN), Rural Funds Group (RFF)

• Earnings: ResMed (RMD)

• IPOs: Barkly Rare Earths (BAK) at 1:00 pm AEDT 

• AGMs: None

Economic calendar (AEDT):

• 11:30 am: Australia Producer Price Index (Q4)

• 8:00 pm: Germany GDP (Q4)

• 9:00 pm: Eurozone GDP (Q4)

• 12:30 am: US Producer Price Index (Dec)