By Gus McCubbing
Investors are eagerly waiting to see whether there is any substance behind the rumours that Donald Trump plans to roll out a significant housing stimulus package when the US president takes the stage in Davos.
While closer to home, the key data point for the week ahead will be the release of local employment figures, which could determine whether the Reserve Bank of Australia increases or holds the cash rate at its next meeting in February.
Trump, who on Saturday (Sunday AEDT) threatened fresh tariffs on goods from European nations that oppose his push to take control of Greenland, will headline the World Economic Forum, which will also feature Fortescue executive chairman Andrew Forrest and BHP boss Mike Henry.
The US president in December promised “some of the most aggressive housing reform plans in American history” in the new year before clarifying he would discuss housing and affordability at Davos.
“That is a big one for the market, given stocks like James Hardie have been running quite aggressively on the potential for more stimulus,” said Ten Cap founder and portfolio manager Jun Bei Liu.
US stocks fell on Friday (Saturday AEDT) to finish the week lower, as traders mulled Trump’s reluctance to nominate Kevin Hassett as Federal Reserve chairman, succeeding Jerome Powell, ahead of a long weekend.
Meanwhile, the Australian sharemarket will open flat on Monday, with futures pointing to the S&P/ASX 200 edging 3 points, or less than 0.1 per cent, lower at the start of trade.
The local stock exchange notched its longest winning streak in eight months on Friday, closing the week at 8903.90, as gains in banks and technology stocks outweighed profit-taking in miners.
Minotaur Capital co-portfolio manager Thomas Rice said investors would keep a close eye on Intel’s fourth-quarter earnings on Thursday (Friday AEDT), which could provide a boost to ASX tech stocks.
This comes after the sector finished last week on a high after Taiwan Semiconductor Manufacturing forecast revenue growth of close to 30 per cent in 2026, beating analyst estimates and easing concerns about weakness in AI-related demand. Netflix, aluminium giant Alcoa and a raft of regional US banks are also set to report results next week.
“Markets are looking for confirmation that AI capex is stronger for longer,” Rice said. “And Intel’s earnings are the next key checkpoint – it will test whether the optimism signalled by TSMC carries into US tech guidance.”
Despite these positive signs, he also cautioned that markets remained at the whim of Trump’s every move, whether it be an escalation between the US and Iran or the president’s pursuit of Greenland.
“Washington’s unpredictability on foreign policy means any sharp moves could trigger risk-off flows,” he said. “Investors should be prepared for headline-driven swings that can amplify or offset the fundamental signals from earnings and economic data.”
Employment figures
In Australia, traders will focus on jobs figures released on Thursday, which will play a key role in determining whether the RBA holds the cash rate steady at 3.6 per cent next month, or surprises with a hike.
Markets are pricing in a one-in-three chance of a rate rise, but at least one full 25-point increase is expected this year.
Westpac expects Thursday’s data to show that the economy added 40,000 jobs, while also tipping the unemployment rate to hit 4.4 per cent.
“Jobs growth has been on the softer side – on a three-month average basis, employment is now tracking a 1.4 per cent year pace, a clearly below-average pace,” said Westpac senior economist Michael Gordon.
Wilson Asset Management portfolio strategist Damien Boey said Thursday’s labour market data would be critical in shaping the chances of a February rate hike, as well as the shape of the domestic yield curve.
“It seems that we are past the point of easy gains in stocks, underpinned by growth recovery, easy policy settings and disinflation,” Boey said.
Other key data for the week ahead includes Canadian inflation for December and Chinese GDP growth, both released on Monday, UK inflation on Wednesday, and US personal spending figures on Thursday.
The Bank of Japan is also expected to leave rates on hold when it meets on Friday, having just hiked rates in December by 25 basis points to 0.75 per cent, the highest level in 30 years. It comes as a weakening yen hit a 12-month high of 159.14 against the greenback in the last week.
“Officials have outlined that a weak yen could feed through to imported
inflation,” said Gordon. “This in turn would see consumers exercise caution in their spending, muting demand-driven inflation.”
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