Morning Wrap: ASX 200 to rise, US stocks post strong weekly gains ahead of Trump inauguration

ASX 200 futures are up 28pts (0.33%) as of 8:30 am AEDT.

In a nutshell:

• US stocks rallied on Friday, closing out a strong week as bond yields eased from uncomfortably high levels

• Trump will be sworn in as US president for a second time tonight

• Flurry of mixed economic data since Friday, including better-than-expected China GDP growth, poor UK December retail sales and an IMF upgrade for US GDP in 2024

Let's dive in.

S&P 500 SESSION CHART

S&P 500 gapped up, finished slightly off best levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished higher, off best levels but capped off a week of healthy gains

• Equal-weight S&P 500 underperformed the official benchmark by 51 bps, reflecting big tech leadership

• US weekly recap: Russell 2000 +3.96%, Dow +3.69%, S&P 500 +2.91% and Nasdaq +2.45%

• US 10-year yield down 14 bps for the week, while still elevated, the pullback is supporting risk assets this week

• S&P 500 Q4 EPS so far up 12.5% vs. forecasts of 11.9% and of the 9% of companies that have reported, 79% have beaten EPS expectations

• Global equity funds see drop in demand on rising US Treasury yields (RT)

• ETF flows smash through previous full-year record to hit US$1.5tn, peaking after Trump's election win (FT)

• Wall Street traders' playbook for Trump's White House return is to ignore the noise (BBG)

• China braces for Trump showdown with yuan and equities in the firing line (BBG)

STOCKS

• Trump promises to revive TikTok via executive order on Monday, but wants app to be at least half owned by US investors (CNBC)

• Starbucks to announce layoffs by early March in push to improve efficiency (SB)

• Rio Tinto, Glencore have discussed merger in what could be largest-ever mining deal (FT)

• Apple suspends AI-generated news alerts after notification errors (AX)

• Microsoft to lift price of Office by 30% for access to new AI tools (BBG)

• Tech start-up Shield AI hits US$5bn valuation (FT)

CENTRAL BANKS

• BOJ likely to keep hawkish and hike rates next week (RT)

• Asian central banks taking different approaches to currency management as FX reserves fall, growth concerns intensify (BBG)

POLITICS & GEOPOLITICS

• Trump says he will unleash one of the most sweeping deregulatory pushes in US history starting in first week in office (WSJ)

• China bracing for Trump trade war, aiming at industries as diverse as chips, apparel and industrial plastic (BBG)

• Xi sending Han Zheng, the highest-level Chinese official ever, to attend Trump's inauguration (AX)

• Israel set to approve Gaza ceasefire, hostage deal (AX)

• Trump team crafting sanctions strategy to facilitate Russia-Ukraine deal, punish Iran and Venezuela (BBG)

ECONOMY

• China Q4 GDP up 5.4% vs. expectations of 5.0% and quickening from 4.6% growth in Q3 as a flurry of support measures kick in (RT)

• China home prices steady for the first time in 18 months (RT)

• China's population falls for third straight year in 2024 despite higher birth rate (NBS)

• UK retail sales unexpectedly dip 0.3% MoM in December vs. expectations of a 0.4% increase amid cautious consumers and inflation reacceleration concerns (BBG)

• US December housing starts up 15.8% MoM, well above expectations of a 2.8% increase (BBG)

• IMF raises 2025 US growth forecast to 2.7%, up from 2.2% in October and the highest among G7 countries (IMF)

ASX TODAY

• CogState reports preliminary 1H25 revenue growth of 18% to $23.9m (CGS)

• Gold Road releases Gilmour Project PFS, pre-tax free cash flow of $337m at A$3,500/oz, project remains on schedule to be shovel ready from late 2026 (GOR)

• Ioneer confirms closing of $996m loan from US Department of Energy, Nasdaq-listed shares up 21.9% on Friday (INR)

• Polynovo reports 1H25 group revenue up 22.8% to $59.9m, US sales up 27.9% to $41.2m, first sales were made in Malta, Portugal and Peru (late Friday arvo announcement sent shares up 2.3%) (PNV)

• Star Entertainment fails to receive NSW and Queensland government support for tax reprieve (AFR)

WHAT TO WATCH TODAY

• Uranium: Uranium ETF (URA) gained 2.4% overnight to hit a fresh one-month high (although it faded from session highs of 5.0%). Uranium stocks are starting to stabilise despite high short interest among most ASX-listed names.

BROKER MOVES

• Deep Yellow initiated Outperform with $2.00 target (MQG)

• Life360 upgraded to Buy from Neutral; target up to $55 from $52 (UBS – 16-Jan)

Stocks trading ex-dividend: 

• Mon 20 Jan: None

• Tue 21 Jan: Spheria Emerging Companies (SEC) – $2.30

• Wed 22 Jan: Leo Lithium (LLL) – $0.505

• Thu 23 Jan: Mirrabooka Investments (MIR) – $3.42

• Fri 24 Jan: None

Other ASX corporate actions today: 

• Dividends paid: None

• Listing: None

• Earnings: None

• AGMs: None

Economic calendar (AEDT):

No major economic announcements.