HomeReportsMacro Monday: Stocks are running scared
Equities are experiencing a September to forget and although most indices haven’t yet broken below their June lows things are “feeling” worse this time around e.g. the S&P500 closed on Friday 1.6% above its mid-year low but the Dow ended the week at fresh lows for 2022. There was no really good news on either the macro-economic or geopolitical front but we feel it was a trifecta of semi-left-field news that sent stocks reeling e.g. the S&P500 tumbled -4.6% and while the ASX200 fared better only falling 2.4% it’s set to open down another -1.25% this morning. The problem for stocks came from 3 different continents which combined with rising interest rates created a major headwind for risk assets:
The ASX closed higher after a day off, buoyed by a powerful rally in precious and base metals stocks, with gold climbing to yet another all time high, now seemingly setting a new record every day, and Copper stocks chipping in too. While geopolitical noise remains in the background, the session had a risk-on feel as the rotation into resources showed no signs of slowing down with the index closing at its highest level since October.
Japan’s bond market has rattled global financial markets several times in recent years, and risks appear to be resurfacing. The most memorable yen carry-trade unwind since COVID started after the Bank of Japan (BOJ) raised interest rates in 2024. The BOJ’s first rate hike came in March 2024, when it ended negative interest rates and lifted the policy rate to just 0–0.1%.
The ASX 200 finished a choppy week down just -0.5%, recovering from early weakness sparked by President Trump’s threats toward European allies tied to his ambitions around Greenland. While the rhetoric was quickly walked back at Davos, the episode was a reminder of how abruptly geopolitical risk can re-emerge. Yet markets largely shrugged it off, highlighting their resilience to headline-driven volatility. The “buy-the-dip” trade — closely tied to the so-called “TACO trade” (Trump Always Chickens Out) — continues to deliver, at least for now. The market may feel unsettled to many, but it's still up +1.7% year-to-date, dragged higher by a robust materials sector, which has already surged +9.3% in 2026.
The ASX 200 finished a choppy week down just -0.5%, recovering from early weakness sparked by President Trump’s threats toward European allies tied to his ambitions around Greenland. While the rhetoric was quickly walked back at Davos, the episode was a reminder of how abruptly geopolitical risk can re-emerge. Yet markets largely shrugged it off, highlighting their resilience to headline-driven volatility. The “buy-the-dip” trade — closely tied to the so-called “TACO trade” (Trump Always Chickens Out) — continues to deliver, at least for now. The market may feel unsettled to many, but it's still up +1.7% year-to-date, dragged higher by a robust materials sector, which has already surged +9.3% in 2026.
The ASX finished modestly higher as a rare day of strength for the IT stocks and continued support for the gold miners offset broader caution across banks and consumer shares. While the headlines have cooled through the week, geopolitical tension and rake hike expectations continue to reinforce nervous sentiment, as the market positions for what will likely be a volatile reporting season ahead – both here and in the US.
The ASX 200 bounced +0.8% on Thursday, driven higher by a robust banking sector - the financials contributed 80% of the index's 66-point gain. The gold sector dominated the losers' enclosure as the precious metal lost its shine following Trump's more balanced speech from Davos, which notably stated that the US wouldn’t invade Greenland or impose tariffs on European nations in February.
The ASX proved resilient today, shaking off a stronger-than-expected jobs report that lifted rate-hike expectations for the February RBA meeting. Tariff fears eased as President Trump softened his stance on Europe and Greenland underpinning sentiment, with strength across the banks and energy sector more than offsetting weakness in gold, allowing the market to hold solid gains into the close.
The ASX 200 slipped another 0.4% on Wednesday, its third consecutive decline, which was not enough to take the index into negative territory for the year, but it's trying hard. After a brief attempt to bounce on Tuesday, the growth stocks returned to the losers enclosure while the resources delivered another standout performance to mitigate the day's decline.
The ASX fell for a third consecutive session, although strength in some pockets (resources) was enough to only see modest declines at the index level. Tech and banks the major drags, while Gold rallied another $US100/oz to hit yet another record high at $US4871/oz - so much for it being a crowded trade!
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