US markets shrugged off geopolitical flare ups and climbed confidently higher in its first full week of trading in 2026. Meanwhile Aussie stocks fell slightly as investors continued their rotation away from financials, opting instead for the outperforming materials sector.
In the US, the S&P 500 rose 1.5% as a mixed set of economic data helped ease concerns around the labour market while keeping expectations for rate cuts intact. Earlier in the week, JOLTS job openings fell short of expectations, while services PMI surprised to the upside, printing at 54.4 versus forecasts of 52.2, signalling resilient consumer spending.1 Later, the December unemployment rate declined from 4.6% to a better-than-expected 4.4%, even as job gains disappointed at 50,000 compared with expectations of 66,000.2 The Consumer Electronics Show (CES) also helped boost tech stock sentiment throughout the week as companies showed off advancements in robotics, AI and more.
Australian financial stocks sold off as investors rotated out of last year’s outperformers and into lagging sectors now catching up. Materials, for example, have surged as commodity prices, particularly precious and industrial metals, pushed to new all-time highs.3 Banks have underperformed early in the year as markets grow increasingly uncertain around the RBA’s interest-rate path.
Defence tech (ARMR, DFND, DTEC) was the top performing theme of the week after President Trump called for a 50% increase in the US annual defence budget to US$1.5 trillion by 2027, citing the need to prepare for China’s military rise and potential future conflicts. 4
In the world of commodities:
- Silver (ETPMAG) surged to a new all-time high of US$86 per ounce, with retail momentum driving prices higher despite a wave of selling linked to the rebalancing of some of the world’s largest commodity indices.5
- Lithium (ACDC) prices surged after the Chinese government unveiled plans to reduce export tax rebates on Chinese battery companies.6 While battery makers are likely to suffer some near-term pressure, markets now expecting a rush of battery exports/orders before the tax rebates roll off in April, which may push lithium higher.
- Hedged Gold (GHLD) headed higher after the US DOJ launched a grand jury investigation on Federal Reserve Chair Jerome Powell, leading to renewed fears around Fed Independence and weakening the dollar.7
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