Morning Wrap: ASX 200 to slip, S&P 500 retreats from record highs, Oil prices hit three-month high

ASX 200 futures are down 10pts (-0.11%) as of 8:30 am AEDT.

In a nutshell:

• Major US benchmarks slightly lower, sector pivot from tech to cyclicals

• US December core CPI comes in slightly cooler-than-expected but treated largely as a non-event due to messy data

• Q4 earnings season kicks off with JPMorgan results

• Oil is on a four-day winning streak, now trading at a fresh three month high on Iran developments

Let's dive in.

S&P 500 SESSION CHART

S&P 500 trended lower, closed slightly off worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks lower, closed slightly off worst levels

• US December core CPI came in slightly cooler-than-expected but no real surprises from the report and noisy data amid government shutdown distortions

• A few rotations/pivots taking place, from tech towards cyclicals, and a rotation within tech itself from software into semis/AI enablers

• US Q4 earnings season kicked off with a lacklustre result from JPMorgan

• Consensus is looking for S&P 500 earnings growth of 8.3% in Q4, with Tech (+26%) expected to deliver the best earnings growth alongside Materials (+9.0%), while Discretionary (-3.5%) is forecast to report the largest earnings decline

• US small-cap stocks log longest outperformance vs. S&P 500 since 2019 (BBG)

• Global investor activism accelerating, though faces high hurdle for returns (NK)

• Japan snap election speculation puts traction behind Takaichi trade (BBG)

• CME Group plans to set precious‑metals futures margins as a percentage of notional as commodity prices surge (BBG)

STOCKS

• JPMorgan shares dip 4pc on mixed Q4 result, soft on revenue and magnitude of NIM beat, though EPS ahead, FY26 net interest income guidance ahead but IB fees missed (BBG)

• Nvidia denies requiring upfront payments for H200 chips, refuting earlier China payment reports (RT)

• Microsoft unveils initiative to curb water usage at its US data centers (YF)

• Adobe analysts have turned most bearish since 2013 amid AI threats (BBG)

• Trump says Microsoft will change practices so consumers don't face higher utility bills from AI data centers (CNBC)

• Microsoft warns China is winning AI race outside West as DeepSeek adoption spreads across Africa (FT)

• Micron warns global memory shortage unlikely to ease before 2028 (DGT)

• Oklo and TerraPower will need to invest more than $14bn in new reactors to support Meta's data centers (BBG)

• Citi set to reduce headcount by ~1,000 this week as part of cost cutting push (BBG)

• BlackRock to cut hundreds of jobs amounting to 1% of global workforce (BBG)

• Merck seeks "multi‑tens of billions" in acquisitions, targeting strategic growth opportunities (BBG)

TARIFFS

• Likelihood Supreme Court will side with Trump's tariff plan sits at ~32%, according to traders on Kalshi (FB)

• Trump threatens to impose 25% tariffs on countries doing business with Iran (BBG)

• US nears deal with Taiwan to reduce tariff rate to 15% from 20%, commit TSMC to expand US investments (BBG)

CENTRAL BANKS

• Trump faces GOP pushback after Powell says DOJ grand-jury probe pressures and intimidates the Fed (BBG)

• President Trump calls Powell either "incompetent" or "crooked" (CNBC)

• Traders now nearly fully pricing in Fed cut by June after cooler December CPI (BBG)

• DOJ probe could thwart White House attempts to exert control over Fed board, encourage officials to stay for longer (BBG)

• Trump to interview BlackRock's Rick Rieder this week as he narrows on a nominee to replace Powell (FB)

• NY Fed's Williams says dual mandate in better balance after rate cuts, policy well positioned to stabilise job market (BBG)

GEOPOLITICS

• Iran says open to negotiations with US over nuclear program as Trump weighs response (RT)

• Bipartisan group US lawmakers to visit Denmark amid Trump's Greenland takeover threats (RT)

• Greenland's PM says his people would choose Denmark over the US (BBC)

• Greenland bolsters NATO-managed defences in response to renewed US takeover threats (BBG)

• Germany optimistic Europe can compromise with US on Greenland amid tensions over Trump (BBG)

ECONOMY

• US December core CPI up 0.2% month-on-month vs. 0.3% ests, headline CPI was in-line at 0.3%, annualised headline at 2.7% vs. 2.6% ests, shelter index remains the primary driver of inflation, grocery prices also experience largest spike since Dec-22 (BBG)

• China export growth likely slowed due to high base, weak domestic demand dampens imports (RT)

• UK retail sales growth slowed for fourth straight month in December as consumers waited for sales (BBG)

• Australia consumer confidence weakens further following RBA's hawkish hold in December (RT)

• India CPI rebounds due to food price volatility, below-target inflation seen keeping alive prospect of another rate cut (BBG)

ASX TODAY

• It's crickets out there! Still early January so newsflow remains slow. Will probably pick next week and also see a lot of trading updates/pre-announced 1H26 earnings

• ASX 200 set to open slightly lower, some softness this morning as we're up 1.45% in the last five sessions to the highest since 12-Nov-25

• Monadelphous Group awarded $300m maintenance services contract with Rio Tinto over five years (MND)

WHAT TO WATCH TODAY

• Energy: Brent up 1.7% overnight and above US$65, the highest since 24-Oct-25 on the latest Iran headlines. Trump urged Iranians to keep protesting and said talks are not on the table until Tehran killings stop.

• Materials: One of my favourite sectors to watch right now, though quite overextended/overbought but still in breakout mode. Softness for nickel, uranium and copper overnight, but iron ore miners, gold and lithium eked out some small gains. Will post a few more thoughts/ideas on the blog.

BROKER MOVES

• Endeavour Group upgraded to Buy from Neutral; target up to $4.10 from $3.92 (CITI)

• Macquarie upgraded to Neutral from Sell; target up to $208.73 from $200.56 (GS)

Stocks trading ex-dividend: 

• Wed 14 Jan: Tower (TWR) – $0.144

• Thu 15 Jan: None

• Fri 16 Jan: None

Other ASX corporate actions today:       

• Dividends paid: None

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEDT):

• 2:00 pm: China Balance of Trade (Dec)

• 12:30 am: US PPI (NOV)