Market Wraps

Morning Wrap: ASX 200 to soar, S&P 500 logs best day since November, US core CPI slows

Thu 16 Jan 25, 8:38am (AEDT)

ASX 200 futures are up 104pts (+1.26%) as of 8:30 am AEDT.

In a nutshell:

  • US core inflation was slightly cooler-than-expected

  • Several major US banks smashed earnings expectations (earnings, margins and EPS beats across the board) and rallied 2-6%

  • Major US benchmarks soared on the inflation report

Let's dive in.

Overnight Summary

Thu 16 Jan 25, 8:22am (AEDT)

Name Value % Chg
Major Indices
S&P 500 5,950 +1.83%
Dow Jones 43,222 +1.65%
NASDAQ Comp 19,511 +2.45%
Russell 2000 2,264 +2.01%
Country Indices
Canada 24,789 +0.82%
China 3,227 -0.43%
Germany 20,575 +1.50%
Hong Kong 19,286 +0.34%
India 76,724 +0.29%
Japan 38,445 -0.08%
United Kingdom 8,301 +1.21%
Name Value % Chg
Commodities (USD)
Gold 2,719.3 +1.14%
Iron Ore 99.99 +1.29%
Copper 4.401 +1.24%
WTI Oil 80.52 +3.55%
Currency
AUD/USD 0.6229 +0.65%
Cryptocurrency
Bitcoin (USD) 99,706 +3.28%
Ethereum (AUD) 5,517 +6.75%
Miscellaneous
US 10 Yr T-bond 4.653 -2.82%
VIX 16.14 -13.74%

US Sectors

Thu 16 Jan 25, 8:22am (AEDT)

SECTOR % CHG
Consumer Discretionary +3.01%
Communication Services +2.66%
Financials +2.58%
Information Technology +2.22%
Utilities +1.46%
Energy +1.39%
SECTOR % CHG
Materials +0.91%
Industrials +0.67%
Real Estate +0.44%
Health Care +0.24%
Consumer Staples -0.09%

S&P 500 SESSION CHART

SPX 2025-01-16 08-11-02
S&P 500 soared and finished near best levels (Source: TradingView)

OVERNIGHT MARKETS

  • Major US benchmarks rallied, with the S&P 500, Nasdaq and Russell 2000 logging their best sessions since the day after Trump's election last November

  • Today’s big drivers– Cooler-than-expected US core inflation sent bond yields lower and stocks soaring, strength was further supported by better-than-expected earnings from JPMorgan, Citi, Wells Fargo etc. with NII, NIM and EPS beats across the board

  • US 10-year yield logged its largest one-day decline since 2 August 2024, but only scratching a one-week low

  • Fed rate cut expectations for January remain relatively unchanged (97.3% likelihood of a hold vs. 97.9% yesterday) but outlook for the rest of the year ticked higher (e.g. May hold likelihood now 54.7% vs. 63.4% yesterday)

  • Investors pour billions into S&P equal weight fund on growing concerns over Mag 7's dominance of US market (FT)

  • US midcap stocks are attractive right now on cheaper valuation vs larger peers, says Goldman Sachs (BBG)

  • Global oil markets face smaller surplus this year amid stronger demand, new supply risks, says IEA (BBG)

US INFLATION

  • December core CPI up 0.2% MoM, slightly below consensus 0.3%

  • Annualised core was  3.2% vs. 3.3% consensus

  • Headline CPI up 0.4% MoM, slightly ahead of 0.3% consensus

  • Annualised headline at 2.9% vs. 2.8% consensus

  • Energy and food contributed the bulk of the upside, with energy index up 2.6% and accounting for 40% of all-items increase

  • Food rose 0.3% MoM, decelerating from 0.4% increase in the previous month

  • Shelter index up 0.3% MoM, same as last month

  • Car insurance and airfares both reaccelerated

STOCKS

  • Nvidia's stellar $3tn rally on edge as chipmaker's sales growth is slowing and competition is rising (BBG)

  • BlackRock shares added 5.1% after the world’s largest asset manager posted a Q4 earnings beat, with assets soaring to US$11.6tn (RT

  • Citi gained 6.4% after Q4 earnings topped Wall Street expectations, with adjusted EPS 9.8% ahead of consensus (CNBC)

  • Goldman Sachs rallied 6% on Q4 earnings beat, with quarterly EPS 45% ahead of analyst expectations (CNBC)

  • JPMorgan shares tick 2% higher on stronger-than-expected Q4 earnings, led by fixed income and investment banking segments (CNBC)

  • Wells Fargo shares soar 6.6% on better-than-expected earnings and guidance (CNBC)

CENTRAL BANKS

  • PBOC makes second-largest net liquidity injection via 7D reverse repos on record (BBG)

  • BoE easing bets pick up after softer UK inflation with money markets fully pricing two quarter-point cuts for 2025 (BBG)

  • BOK expected to cut rates by 25 bp Thursday amid growing concerns over economy (BBG)

  • Fed Williams says economy is in good shape, disinflationary trends remain but process has been choppy (FED)

POLITICS & GEOPOLITICS

  • Israel and Hamas agree to ceasefire, Israel to exchange Palestinian prisoners for hostages held by Hamas (RT)

  • US to tighten restrictions on sales of advanced chips to China produced by firms like TSMC, Samsung (BBG)

  • EU weighing new curbs on imports of Russian aluminum and LNG, banning more banks from SWIFT (BBG)

ECONOMY

  • US imports from China finished 2024 strong after some companies stockpiled shipments ahead of Trump 2.0 (RT)

  • UK inflation unexpectedly slows to 2.5% in December, paving way for BoE easing (FT)

  • UK business confidence dips to two-year low after Labour's budget (RT)

  • German GDP posts second consecutive year of contraction, down 0.2% last year vs. 0.3% decline in the previous year (FT)

Industry ETFs

Thu 16 Jan 25, 8:21am (AEDT)

Name Value % Chg
Commodities
Silver 27.97 +2.83%
Strategic Metals 42.51 +2.11%
Lithium & Battery Tech 41.87 +1.70%
Uranium 27.645 +1.64%
Steel 60.4435 +1.42%
Copper Miners 39.75 +1.22%
Gold Miners 36.71 +1.07%
Industrials
Construction 79.58 +2.62%
Aerospace & Defense 148.89 +0.55%
Agriculture 26.725 +0.24%
Global Jets 26.01 -0.54%
Healthcare
Biotechnology 133.42 +1.41%
Name Value % Chg
Cryptocurrency
Bitcoin 24.23 +3.37%
Renewables
Solar 34.34 +1.18%
CleanTech 6.98 +0.79%
Hydrogen 23.2 +0.69%
Technology
Robotics & AI 32.39 +2.86%
FinTech 31.68 +2.49%
E-commerce 28.2 +2.40%
Electric Vehicles 23.45 +2.36%
Video Games/eSports 83.925 +2.24%
Semiconductor 223.21 +1.94%
Cloud Computing 24.14 +1.77%
Cybersecurity 32.37 +1.57%
Sports Betting/Gaming 19.0 +0.14%

ASX TODAY

  • Genesis Minerals reports Q2 gold production of 57,055 oz, on-track to meet FY25 guidance of 190-210,000 oz (GMD)

  • Rio Tinto reports Q4 Pilbara iron ore production (100% basis) of 86.5Mt, in-line with market expectations, however, FY24 iron ore costs expected to be in the upper half of $21.75-23.50 per tonne guidance (RIO)

WHAT TO WATCH TODAY

  • Big Risk On: Discretionary and Tech were among the best performing S&P 500 sectors overnight. The S&P/ASX 200 Info Tech sector is currently on a six-day losing streak, down 6.4%. Will local tech stocks experience a sharp rebound on Thursday?

  • Financials: A clean sweep of better-than-expected earnings from US banks. While they are fundamentally very different businesses, the biggest bright spot was the better-than-expected 2025 net interest income guidance as well as net interest margin beats and in-line expense guidances. Could this provide a positive lead in for local financials?

BROKER MOVES

  • AUB Group initiated Hold with $32.80 target (CSLA)

  • Baby Bunting upgraded to Buy from Neutral; target is $2.01 (CITI)

  • Beach Energy downgraded to Sell from Neutral but target up to $1.30 from $1.20 (CITI)

  • Computershare downgraded to Neutral from Buy but target up to $35.50 from $31 (GS)

  • DigiCo Infrastructure REIT initiated Buy with $5.80 target (GS)

  • Origin Energy downgraded to Neutral from Buy but target up to $10.40 (GS)

  • Steadfast Group initiated Outperform with $6.60 target (CSLA)

Key Events

Stocks trading ex-dividend: 

  • Thu 16: None

  • Fri 17 Jan: None

Other ASX corporate actions today: 

  • Dividends paid: Garda Property Group (GDF)

  • Listing: Southern Cross Gold Consolidated (SX2)

  • Earnings: None

  • AGMs: None

Economic calendar (AEDT):

  • 10:30 am: Australia Unemployment Rate (Dec)

  • 5:00 pm: UK GDP (Nov)

  • 11:30 pm: US Retail Sales (Dec)

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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