ASX 200 futures flat, S&P 500 falls as yields bounce, shipping costs soar on Red Sea attacks
ASX 200 futures are trading 4 points higher, up 0.05% as of 8:30 am AEDT.

S&P 500 SESSION CHART

MARKETS
- Markets kick off the week on a defensive tone amid higher yields, a stronger US dollar, pushback against aggressive 2024 easing expectations and negative headlines surrounding large caps like Apple, Tesla and Boeing
- S&P 500 lower but off worst levels of -0.77%
- Bond yields and US dollar higher, with the US 10-year and US Dollar Index both near a 1-month high
- US Dollar has biggest rally in 10 months on Fed cut uncertainty and geopolitical tensions (Bloomberg)
- Bond market faces uncertainty as fiscal concerns clash with rate cut expectations (Reuters)
- Morgan Stanley's Wilson says slashed EPS estimates creating optimal platform for US companies to deliver beats (Bloomberg)
- Consensus profit forecasts have been going up but history shows rate cuts don't bode well for earnings (Bloomberg)
STOCKS
- Apple offers rare iPhone discounts in China (NY Times)
- Boeing will add further quality inspections for 737 MAX following mid-air blowout of cabin panel on Alaska Airlines flight (Reuters)
- TSMC's Q4 profit to slide 23%, analysts expect though predict better growth this year on the back of rebounding demand (Reuters)
- Google to lay off hundreds in its ad sales division (Reuters)
- Uber to shut down its alcohol delivery app, Drizly (CBS)
EARNINGS
Goldman Sachs (+0.7%) – Double beat, quarterly earnings up 51% after substantial loan provisions from the previous year, US economy was stronger-than-expected, corporate activity is beginning to pick up in the US and Europe.
Morgan Stanley (-4.2%) – Beat revenue but missed earnings expectations, revenue beat was helped by strong performance across wealth management and investment banking businesses, expects margins to be lower in the short-to-medium term, currently seeing early-cycle activity as volumes picked up in the third quarter and continued in the fourth.
CENTRAL BANKS
- Fed Governor Waller says Fed is within striking distance of inflation target and cautioned against over-tightening. But pushed back against growing narrative of aggressive market rate cut expectations (Fed)
GEOPOLITICS
- Houthis fire missile at US-owned cargo ship following US airstrikes against their facilities (FT)
- Iran launches missile strikes against targets in Syria and northern Iraq, fueling fear of broader regional conflagration (FT)
- Ships sailing through Red Sea contending with soaring insurance costs, making it cost effective for some to re-route around Africa (Bloomberg)
CHINA
- China's stock market regulator and sovereign wealth fund look to stabilize equity market (Bloomberg)
- China considering 1 trillion yuan of new debt issuance under a so-called special sovereign bond plan (Bloomberg)
- Asset managers prepare for a China stock market rebound, citing attractive valuations (Bloomberg)
- China Q4 GDP growth seen picking up with activity data mostly lackluster (Bloomberg)
ECONOMY
- New York Fed’s Empire State Manufacturing index plunges in January to lowest since pandemic (Market Watch)
- Eurozone consumer expectations flag decline in inflation expectations (Reuters)
- German investor morale improves on ECB easing expectations (Bloomberg)
- UK wage growth slowed in the three months to November (FT)
- Japan wholesale inflation registers first flat read since early 2021 (Reuters)
- Australian consumers remain deeply pessimistic (Bloomberg)

Bank of America’s latest Global Fund Manager Survey
Here are some interesting takeaways and data points from the latest BofA survey:
- Bull & Bear Indicator up to 5.5, the highest since November 2021. The indicator measures investor positioning and ranges between 0 to 10
- A net 79% expect a soft or no landing, the highest in nine months
- Profit expectations highest since February 2022
- A net 2% see a recession, the lowest in 19 months
- Although the survey marked the first negative reading on China growth expectations, the first time since lockdown lows in May 2022
- Long Magnificent 7 remains the most crowded trade
- Worsening geopolitics reclaimed the position as the biggest tail risk

Forward Looking Boom vs. Current Gloom
It's a bit of a rubber meets the road scenario for retail stocks, with the latest Westpac Consumer Sentiment Index pushing back against the optimism reflected in the recent performance of stocks like Super Retail Group (ASX: SUL) and JB Hi-Fi (ASX: JBH).

The Consumer Sentiment Index fell 1.3% to 81 in January from 82.1 in December. Here are some of the key takeaways from the survey.
- "For consumers, the new year looks to have picked up where the old one left off: cost of living and high interest rates continuing to dominate and sentiment bumping around deeply pessimistic levels."
- Less threatening rate outlook lifted expectations for the year ahead, with 'economic outlook' for the next 12 months up 3.8% to 81.8 (but still materially below long run average levels)
- The 'time to buy a major household item' sub-index was largely unchanged at very weak levels, down slightly to 78.0
Shipping Inflation
Global shipping costs have more than doubled in the last six weeks as a result of recent attacks on commercial vessels in the Red Sea.
According to Reuters, rerouting vessels via a much longer southern Africa route adds about 10 days to shipping and about $1 million in fuel.

Could such a development flow through to near-term inflation data and make the Fed's job a little harder?
KEY EVENTS
ASX corporate actions occurring today:
- Trading ex-div: None
- Dividends paid: None
- Listing: None
Economic calendar (AEDT):
- 12:30 pm: China House Price Index (Dec)
- 1:00 pm: China GDP Growth (Q4)
- 1:00 pm: China Industrial Production, Retail Sales, Unemployment (Dec)
- 6:00 pm: UK Inflation (Dec)
- 12:30 am: US Retail Sales (Dec)
This Morning Wrap was written by Kerry Sun
2 stocks mentioned
1 contributor mentioned