The Australian sharemarket ended the week slightly higher, with the ASX 200 up 0.1%, as gains in the Energy (+4.3%) and Consumer Staples (+1.3%) sectors offset weakness elsewhere. The Information Technology (-6.6%) sector led declines, while the Consumer Discretionary (-1.2%), Industrials (-0.9%) and REITs (-1.0%) sectors also lagged. The Australian Dollar remained near US$0.70, and yields held close to multi-year highs. Broader market moves reflected a mix of profit-taking in weaker sectors and selective buying across Energy and Consumer Staples, as investors positioned cautiously ahead of this week’s RBA decision on monetary policy.
US sharemarkets finished the week mixed. The S&P 500 rose 0.3% and briefly crossed the historic 7,000 level for the first time before retreating on Friday after news that Kevin Warsh was tapped as the next US Federal Reserve Chair. The NASDAQ slipped 0.1%, weighed down by software and MedTech results. Communication Services (+4.2%), Energy (+3.9%) and Utilities (+1.7%) sectors led gains, while the HealthCare (-1.7%), Consumer Discretionary (-1.4%) and Materials (-1.2%) sectors lagged. Treasury yields were mixed, the US Dollar weakened, and commodities were volatile.
European sharemarkets finished the week modestly higher, with the STOXX Europe 600 up 0.4%, supported by strength in defensive and commodity-linked sectors. Utilities (+3.4%), Energy (+3.4%) and Banks (+2.7%) led gains, boosted by stable earnings, higher oil prices, and resilient financial results. Telecommunications (+2.5%) also outperformed, reflecting steady demand and defensive flows. In contrast, Technology (-3.1%), Health Care (-1.6%) and Travel & Leisure (-1.2%) lagged due to weaker earnings, FX headwinds, and sector-specific challenges. Automobile & Parts (-1.0%) and Financial Services (-1.1%) also declined, offsetting some broader market gains.
A Golden Start: What January’s Telling Us About 2026
We’re only just through the first month of 2026 and markets have already given us plenty to think about.
The World Economic Forum in Davos wrapped up recently, drawing its usual mix of politicians, central bankers, CEOs and media. Big names in attendance included US President Donald Trump, NVIDIA CEO Jensen Huang, JPMorgan CEO Jamie Dimon, Tesla CEO Elon Musk and President of the European Commission Ursula von der Leyen. Unsurprisingly, Artificial Intelligence (AI) featured heavily on the agenda, as did the ongoing energy transition and the state of global supply chains. While much of the conversation was big picture, it does help set the tone for the year.
A major theme already coming through this year is one of multi-polarity. The world’s forces continue to attempt to reduce reliance on the US. Whether its ultimately effective given the US’ importance in global trade is up for debate. Let’s not forget the US is the world’s largest importer, representing over 13% of global imports, approaching US$4 trillion in recent years.
We learned in the last few weeks that Canada and China made a trade deal, to which Trump responded by threatening a 100% tariff on Canada. Canadian Prime Minister Mark Carney tried to deescalate the situation, acknowledging Canada is bound by the CUSMA agreement with the US, noting the deal with China was narrow, pertaining specifically to canola seed oil and electric vehicles. Meanwhile, India and the European Union reached a far broader free trade agreement, covering over 95% of goods across sectors including automobiles, alcohol, textiles and jewelry. Trump had not yet responded to the news as we write this, but he will likely be unhappy.
On the topic of Trump, he continued to make headlines, with perhaps the most surprising being that he is suing JPMorgan for US$5 billion over the closure of his personal bank accounts. He argues the move in 2021 was politically motivated and aligns with recent accusations that major banks participated in de-banking.
Back in markets, the focus now turns to company earnings. The reporting season is just getting started and there’s more pressure than ever on companies tied to AI to justify last year’s investment frenzy. The bar is higher now and investors are less willing to give free passes. Microsoft, Meta, ServiceNow, Samsung and SK Hynix were important recent reporters we’ve watched. The results so far have been promising, though Microsoft’s capacity constraints pushed out its cloud monetisation progress.
Gold (+13.3% calendar year-to-date) continues its remarkable run, breaking through the US$5,000 level last week. Meanwhile, Silver (+43.3%) has gone parabolic, responding to heightened geopolitics in addition to an underlying industrial upswing that’s similarly supported Copper (+6.9%). It should be noted that commodities all slumped in the final day of the month, after news Trump nominated Kevin Warsh to be the next US Federal Reserve Chair. Warsh was seen as a more sensible choice and perhaps less of a loyalist dove compared to some other candidates.
Broadly, it’s been a solid start to the year. Most major commodities are firmer, credit spreads have tightened and equity markets are in decent shape. Given the positiveness seen in the last few years, these results are quite impressive. One point worth mentioning has been the broadening out of equity market performance, both by company size, geography and sector. A promising sign given the uneasiness felt by investors in the last few years, with the US’ Magnificent Seven driving most of the returns.
We’ll be keeping a close eye on how earnings unfold and how geopolitics continue to shape the narrative. But so far, January has offered a surprisingly balanced mix of strength and resilience for 2026.
Locally, the Reserve Bank of Australia is widely expected to increase the cash rate by 25 basis points to 3.85% when it meets tomorrow, following a surprise uptick in underlying inflation.
Overseas, attention turns to the US corporate earnings season, with Alphabet and Amazon among the major companies reporting this week. Results could influence market sentiment and drive volatility across equities.