Mixed US Data Sparks Shift in ASX and S&P 500 Trends

By John Pranay (Editor)

Australian shares are poised to edge higher, while the S&P 500 in the US is expected to drift lower. The ASX 200 futures are pointing up 9 points or 0.1 per cent to 8793. The Australian dollar has depreciated by 0.4 per cent against the US dollar, trading at US66.82¢. The key economic indicators to watch include job vacancy data, scheduled for release at 11.30am, and China's trade data.

The situation is a result of mixed signals from the US reporting season and December's CPI data. The US consumer price index rose 0.3 per cent last month, driven by a 0.4 per cent increase in the cost of shelter and a 0.7 per cent surge in food prices. Strategas Securities' Don Rissmiller views the data as reinforcing a potential "skip" on rate cuts later this month. In contrast, Evercore ISI's Krishna Guha believes the report came in "on the moderate side of expectations", consistent with his view that the Fed will next cut rates in June.

This is not the first time the US reporting season has caused market volatility. In the past, similar mixed signals have led to fluctuations in the stock market. For instance, in 2022, the US CPI data also showed a rise in food prices, which affected the overall market sentiment.

The situation is part of a broader trend of mixed economic signals. The US Federal Reserve's monetary policy decisions are being influenced by the ongoing trade tensions and the impact of the Trump administration's attacks on the Fed. The market is also watching the developments in China, where trade data is expected to be released soon. The release of job vacancy data in Australia will also be closely watched, as it may indicate the state of the labor market.

The potential risks associated with the situation include market volatility, which may affect investors and the broader economy. The depreciation of the Australian dollar against the US dollar may also have implications for the country's trade balance and economic growth. Furthermore, the ongoing trade tensions between the US and China may have a ripple effect on the global economy.

The key upcoming events to watch include the release of job vacancy data in Australia, China's trade data, and the US's monthly PPI and retail sales data. TD Securities expects China's exports growth to be above consensus, with a 5.5 per cent year-over-year print. The release of these data will provide further insights into the state of the global economy.

This situation highlights the complexities of the global economy, where mixed signals and conflicting views are common. The market is being influenced by a range of factors, including the US Federal Reserve's monetary policy decisions, trade tensions, and the impact of the Trump administration's attacks on the Fed. Crucially, this overlooks the broader structural issues in the economy, such as the growing income inequality and the decline of the middle class. This suggests that the market volatility is not just a short-term phenomenon, but a symptom of deeper structural problems that need to be addressed.

Assessment: Neutral.

1. ASX to edge higher, S&P 500 drifts lower — https://www.afr.com/markets/equity-markets/asx-to-edge-higher-s-and-p-500-drifts-lower-20260114-p5nttt

Methodology: This analysis combines real-time data aggregation from manually selected global sources with advanced AI synthesis, engineered to provide neutral and data-driven insights.