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Markets at a glance 21 January

Here we go. Donald Trump re-takes the White House and is sworn in as the 47th President and investors brace for potential US tariffs. The Australian market is taking things in stride to trade higher, while the Nikkei and US futures have given up earlier gains amid uncertainty and a raft of executive orders coming down the pipeline. Treasuries are choppy, oil is down a tick and the big dollar has rebounded after an overnight plunge. Here’s what you need to know.

Around the grounds

And so it begins, global equity markets are watching and waiting as a flurry of policy announcements are handed down during the first hours of Donald Trump’s second presidency. While the 47th President stopped shy of imposing new tariffs, he later hinted as much as a 25% tariff could be imposed in the near future.  

To the local market reaction, the S&P/ASX200 is in the black as financials and miners lead the gains and investors eagerly await fourth-quarter inflation data due next week for any clues on the path of interest rates.

Markets are still pricing in a 73% chance of a 25-basis point cut from the RBA next month, according to the latest RBA watch tool.  

Breaking down the details, an overnight gain in the price of iron ore is supporting the miners, with the broader financials index up nearly 2%.  Energy stocks meantime are also higher, despite a slip in the price of oil after Trump unveiled plans to maximise U.S. oil and gas production by declaring a national emergency. And across the ditch, New Zealand’s market has edged lower by around half a per cent.  

Going global

Back to the global stage and it’s a volatile session for both shares and U.S. Treasuries which reversed a brief rally early in the Asian session after President Donald Trump announced plans for trade tariffs on neighbouring countries Mexico and Canada.

During a speech after his inauguration, Trump said he is “mulling” imposing 25% tariffs on the two neighbouring countries as soon as February 1, a move which poured cold water on investor hopes of a delay in implementation.

His plans for hefty import tariffs and tax cuts are a key focus for markets who expect those policies to stoke inflation, running the economy hot yet again, giving a boost to the US dollar and hurt bonds.

While Wall Street was closed yesterday for a holiday, futures are back online reversing earlier gains to last trade around 0.4% lower. In the Treasury market, the 10-year yield has paired earlier losses but remains four basis points lower.

Asian markets were the first to react to the Presidency with Japan’s Nikkei 225 giving up earlier gains to trade in the red heading into the afternoon session, MSCI’s broadest index of Asian-Pacific shares outside of Japan has ticked higher, while European and FTSE futures have lost 0.3% each.

To the currency plays, the greenback has rebounded in what can only be called a choppy Asian session after those tariff suggestions from President Trump, though details were lacking on the implementation. In response a knee-jerk slide in the Canadian dollar and Mexican Peso, a slip in the Euro and the Australian dollar lost ground due to increased risk aversion.

In the news

Finishing things off, a quick check in on some of the stocks to watch in today’s trade, Australian listed shares of BHP Group (ASX: BHP) are tracking higher after the mining giant reported a 1% rise in second-quarter iron ore output, bolstered by a stronger contribution from a fully ramped up South Flank project and recovered volumes at its Western Australia operations.

Elsewhere, Australian conglomerate Wesfarmers (ASX: WES) says its e-commerce retailer, Catch, will cease to operate as a standalone business in the fourth quarter of 2025 and transfer its fulfilment centres to Kmart. The move will see one-off costs of up to AU$60 million, to be included in the results for the second of the 2025 financial year. 

Wesfarmers snapped up Catch for around AU$230 million back in 2019 in a bid to boost the small online footprint of its retail units such as Kmart and Target.

HUB24 (ASX: HUB) shares are booming, after the investment platform posted record quarterly platform net inflows of AU$5.5 billion, with total funds under administration soaring 33% from a year earlier. The stock is up more than 5% this year, including today’s move.

To the smaller end of town shares of battery minerals producer Liontown Resources (ASX: LTR) have surged after the company reported bumper production in the second quarter fuelling revenue up to AU$89.8 million dollars, up from the AU$11.6 million on the previous period.  LTR is up nearly 29% this year, including today’s moves.

Finally in the broker space, Jefferies is upbeat on Australia’s Iress (ASX: IRE), tipping the company to post full year net profit after tax of around AU$51.6 million, compared with the AU$10.3 million reported a year ago with the house expecting it to reinstate its dividend plan for FY25.

Price target gets a boost to AU$10.15 a share, with a ‘hold’ rating retained. IRE shares are up over 3% this year as of last close.

 

All prices and analysis at 21 January 2025.  The content is distributed by WealthHub Securities Limited (WSL) (ABN 83 089 718 249)(AFSL No. 230704). WSL is a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited (ABN 12 004 044 937)(AFSL No. 230686) (NAB). NAB doesn’t guarantee its subsidiaries’ obligations or performance, or the products or services its subsidiaries offer.  This material is intended to provide general advice only. It has been prepared without having regard to or taking into account any particular investor’s objectives, financial situation and/or needs. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice.  Past performance is not a reliable indicator of future performance.  Any comments, suggestions or views presented do not reflect the views of WSL and/or NAB.  Subject to any terms implied by law and which cannot be excluded, neither WSL nor NAB shall be liable for any errors, omissions, defects or misrepresentations in the information or general advice including any third party sourced data (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (whether direct or indirect) suffered by persons who use or rely on the general advice or information. If any law prohibits the exclusion of such liability, WSL and NAB limit its liability to the re-supply of the information, provided that such limitation is permitted by law and is fair and reasonable. For more information, please click here


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