Overnight: US Markets Stabilise, but Tariff Risk Shifts to Canada
New York expanded its rebound after the end of the tariff episode last week overnight. Major indices showed modest gains as investors looked past recent geopolitical noise and uncertainty and began refocus on earnings and macro data. The S&P 500 rose around 0.5%, the Dow Jones gained roughly 0.6%, and the Nasdaq added about 0.4%.
Beneath the surface, leadership remained uneven. Small caps lagged the broader market, suggesting the rally is being driven more by selective positioning than broad risk appetite. That pattern reinforces the view that this is a relief-driven move, not a full risk reset.
President Trump partially reopened the tariff episode, threatening 100% tariffs on Canadian imports if Canada pursues a trade arrangement with China, raising the risk that trade policy remains a live negotiating lever ahead of the USMCA review later this year.
Canadian PM Mark Carney has framed the comments as pre-negotiation fluff, while still affirming his commitment to USMCA terms.
Cross-asset signals were mixed. Gold held near record highs, underlining that demand for hedges remains elevated even as equities grind higher. Bond yields were relatively stable, while the US dollar steadied after recent softness.
Source FactSet
Europe: Markets Remain the First Place Risk Gets Priced
European equities were more hesitant. The STOXX Europe 600 slipped 0.2%, reflecting lingering caution after recent tariff volatility and the sense that transatlantic trade policy can be reopened quickly.
Sector performance suggested investors were still de-risking at the margin: travel and leisure lagged, while miners were supported by strength in precious metals.
Australia: ASX Set to Track Global Relief, Selectively
Australian shares are set for a firmer open, following the stabilisation in US markets and strength in commodities. Futures point to gains at the open, with gold miners likely to remain in focus given bullion’s resilience near record levels.
However, with global signals still mixed, investors are likely to remain selective rather than chase a broad-based rally. Financials and defensives may see support, while sentiment-sensitive sectors will continue to take cues from offshore headlines and bond yields
What to watch next
- Tariff spillover risk: Watch whether Canada tariff rhetoric escalates as USMCA review approaches — it’s now a live headline risk alongside Europe.
- Gold and silver: Precious metals holding near highs suggests hedging demand remains strong even as equities stabilise.
- FX response: Any renewed pressure on the CAD and broader USD swings would be an early “stress signal” from the trade tape.
- Europe’s follow-through: If Europe can’t sustain rebounds, it’s a sign markets are still pricing policy uncertainty first through the region.
Today’s Agenda
NAB will release its December business confidence and conditions reports at 11.30am AEDT. The US Conference Board will release its January consumer confidence report at 2am AEDT on Wednesday.
Deutsche Bank Research flagged the week ahead as a major earnings test, led by results from four “Magnificent Seven” stocks — Microsoft, Meta and Tesla on Wednesday (Thursday AEDT), and Apple on Thursday. Together, these companies account for around 16% of the S&P 500, with firms reporting next week representing roughly 32% of total index market capitalisation.
Beyond Big Tech, investors will also focus on results from ASML, Samsung, IBM and SAP, alongside defence primes RTX, Northrop Grumman and Lockheed Martin. Exxon and Chevron close out the week on Friday, while key European reporters include LVMH, Roche and Sanofi
December 2025 CPI data will release tomorrow on Wednesday, 28 January 2026, at 11:30 am AEDT. This report will provide crucial inflation data for the final month of 2025.