The ASX is set to tumble again, with ASX 200 futures down 0.3% to 8,196 points after US trading ended. January inflation numbers are due from the ABS at 11.30am AEDT.

The ASX200 closed lower yesterday, weighed down by declines in the Discretionary (-2.66%), Information Technology (-1.58%) and Materials (-0.89%) sectors. Meanwhile, Utilities (+1.60%), Energy (+0.31%) and Consumer Staples (+0.31%) provided some support.

The downturn followed a volatile session on Wall Street, where major technology stocks slipped ahead of Nvidia’s highly anticipated earnings release.

Locally, several high-profile earnings disappointments added to the pressure while US President Donald Trump announced that tariffs on Mexico and Canada would take effect next month, ending a temporary suspension.

Among the biggest earnings-driven losses, building services provider Johns Lyng plunged 33.43% to $2.53—its lowest since October 2020—after reporting a weaker-than-expected first-half net profit of $20.8 million, down from $31 million a year earlier, and cutting its full-year guidance due to lower weather-related insurance claims.

Domino’s Pizza fell 10.47% to $28.20 after posting a $22.2 million first-half loss, impacted by restructuring costs, write-downs, and impairments. The stock, which peaked at $167.15 in September 2021, has been in decline for over three years.

Viva Energy, the supplier of Shell-branded fuel in Australia, dropped 27.08% to $1.75 after reporting a 20% decline in full-year profit to $254.2 million and warning of a subdued outlook.

Providing some relief, Buy Now Pay Later firm Zip jumped 13.87% to $2.71 following a 117% surge in full-year EBITDA to $67 million. Energy giant Woodside gained 2.78% to $24.03 after delivering a stronger-than-expected core profit of US$2.88 billion and announcing a higher-than-anticipated dividend of US$0.53 per share.

“Today holds earnings reports from companies including Fight Centre, Worley, Scentre, Bapcor and Woolworths as well as the monthly CPI indicator previewed below,” IG Markets analyst Tony Sycamore noted.

“In December, the Monthly CPI indicator showed headline inflation rose by 2.5% cent in the 12 months to December, up from 2.3% in November. At the same time, annual trimmed mean inflation eased to 2.7% from 3.2% in November.  

“The expectation for the January Monthly CPI indicator is for headline inflation to rise to 2.6% YoY as energy rebates wind down. Trimmed mean inflation is expected to ease marginally to 2.6% YoY from 2.7%.

“Today’s release for the first month of the new quarter only includes updates for about 60% of the basket. Additionally, it is skewed towards goods rather than the troublesome service components such as dining out, medical services, and transportation. The rates market starts the day pricing in a full 25bp RBA rate cut by July and a cumulative 52bp of RBA rate cuts for 2025.”

US markets extend losing streak

The S&P 500 and Nasdaq extended their losing streak to four consecutive sessions, weighed down by concerns over tariffs, weakness in technology stocks, and a sharp decline in the CB Consumer Confidence Index.

Consumer confidence dropped to 98.3 in January, well below market expectations of 102.5 and significantly down from November’s high of 111.7. This follows a series of weak economic indicators, including disappointing retail sales data, a soft services PMI, a subdued University of Michigan sentiment reading, and cautious guidance from Walmart.

Uncertainty over tariffs, persistent inflation and the impact of recent job cuts at DOGE have heightened focus on upcoming earnings reports from Home Depot and Lowe’s. Given that consumer spending accounts for approximately 70% of US GDP, recession fears are growing as households tighten their budgets.

In equities, Tesla fell 8.39% to $302.80 amid reports of weak European sales and disappointment with its partially automated driving system. The stock has declined nearly 40% from its December 18 peak of $488.54 and is approaching a key support level at the 200-day moving average of $277. A breach could erase all gains made since the US election.

Meanwhile, Nvidia slipped 2.08% to $126.62 ahead of its earnings report due tomorrow, with investors closely watching for any signals on the broader semiconductor market.

European markets rise

European share markets closed slightly higher on Tuesday, with banking stocks leading gains. Banks rose 1.6%, telecommunications companies advanced 1.2%, and healthcare stocks lifted 1%. However, technology stocks declined 1.5%, while miners were the weakest performers, dropping 1.8% as metal prices fell.

Germany’s economy contracted by 0.2% in the final quarter of 2024, in line with expectations. 

• The pan-European FTSEurofirst 300 index edged up 0.2%.
• The UK’s FTSE 100 index gained 0.1% in London trading.

Currencies and commodities

Currencies

Currencies were mixed against the US dollar in European and US trade. 

• The euro strengthened from US$1.0456 to US$1.0518, holding near US$1.0515 at the US close. 
• The Australian dollar eased from US63.55 cents to US63.22 cents before settling at US63.45 cents. 
• The Japanese yen firmed from JPY149.91 to JPY148.57 per US dollar, closing near JPY148.95.

Commodities

Global oil prices dropped more than 2% to a two-month low on Tuesday, as weaker economic data from the US and Germany raised demand concerns. 

• Brent crude fell US$1.76, or 2.4%, to US$73.02 a barrel.
• US Nymex crude lost US$1.77, or 2.5%, to US$68.93 a barrel.

Base metal prices declined after US President Donald Trump reaffirmed his import tariff plans for Canada and Mexico. 

• Copper futures fell 0.7%, while aluminium dropped 1.3%.
• Gold futures slid US$44.40, or 1.5%, to US$2,918.80 an ounce, as investors took profits following a record high in the previous session, driven by concerns over Trump’s tariff stance. Spot gold was trading near US$2,913 at the US close.
• Iron ore futures edged down US2 cents, or less than 0.1%, to US$107.17 a tonne, as market sentiment weakened following Trump’s moves to restrict Chinese investments.

What about small caps?

The S&P/ASX Small Ordinaries (XSO) dipped 0.37% to 3,174.10. Over the five days, the index has lost 2.23%.

News is trickling in today, but you can read about the following and more throughout the day.

1. Sovereign Metals Ltd has confirmed that further test work on graphite from its Kasiya Rutile-Graphite Project in Malawi has validated the material’s suitability for expandable (fire retardant) and expanded (gaskets, seals, and brake lining) applications.
2. Suvo Strategic Minerals Ltd has announced that its recently formed joint venture with PERMAcast R&D Pty Ltd has executed a binding Memorandum of Understanding (MoU) with Wind With Purpose Pty Ltd, a wind energy development company.
3. Imugene Ltd, a clinical-stage immuno-oncology company, has received a Notice of Allowance from the Chinese Patent Office for City of Hope’s patent application number 201880064280.9, which protects the CD19-expressing oncolytic virus, onCARlytics.
4. Olympio Metals Ltd has signed a binding Letter of Intent with Bullion Gold Resources Corporation to enter an option agreement for up to 80% of the Bousquet Gold Project in Quebec, Canada. The project is situated on the Cadillac-Lake Larder Fault Zone, known as the ‘Cadillac Break,’ a significant structure hosting high-grade gold mineralisation.