Josh Gilbert, market analyst at eToro, shares his three things to watch in Australia in the coming days.
1. Tech earnings: Apple, Tesla, Microsoft, Meta
With four of the Magnificent Seven set to report earnings this week, investors are looking for signs that these tech giants still hold promise in 2025 – particularly considering the relationship their CEOs have with newly inaugurated US President Donald Trump.
Tesla shares have faced slight pressure in the last month following Trump’s recent orders to pull electric vehicle (EV) incentives. However, this was not entirely unexpected and did not seem to concern CEO Elon Musk. During Trump’s previous term, Tesla shares surged 1,600%.
Looking ahead, Tesla’s vision extends beyond EVs, with advancements in artificial intelligence (AI) and autonomous technology positioning it for growth under Trump’s innovation-focused agenda. Tesla stock is currently up 4.7% year-to-date.
Apple’s previous earnings delivered solid results but lacked impressive growth. The company projected low-to-mid single-digit growth for the current quarter, which investors will watch closely.
Apple, down 5.7% year-to-date, has faced challenges, including declining market share in China, where research firm Canalys recently ranked it behind Vivo and Huawei. However, a multi-year upgrade cycle could drive recovery in its share price.
Microsoft and Meta are poised to benefit from Trump’s ambition to make America the “world capital in AI”. Investors remain cautious about Microsoft’s AI investments, making this earnings report critical. Meanwhile, Meta has gained 67% over the past year, with its AI return on investment a key focal point.
eToro data reveals 44% of Aussie retail investors expect the Magnificent Seven to outperform the broader market in 2025, while 36% predict they will perform in line.
2. Q4 inflation in Australia
Australian fourth-quarter inflation figures, due Wednesday, are not expected to bring surprises.
The Australian Bureau of Statistics’ Monthly Business Turnover Indicator for December showed that even with the Christmas retail rush, consumer-facing businesses struggled due to high operational costs and changing consumer habits. Price increases at the checkout seem inevitable.
The Reserve Bank of Australia’s (RBA) policy stance is unlikely to change significantly based on this week’s data. While market expectations for a rate cut have grown, a softer print could increase the likelihood of a February cut. However, concerns about a weak Australian dollar persist, as a rate cut could exacerbate downward pressure on the currency.
Economists also highlight potential risks posed by Federal Government job creation initiatives, which could conflict with the central bank’s efforts to manage inflation.
3. Fed interest rate decision
The US Federal Reserve is set to announce its first interest rate decision under Trump’s presidency on Wednesday.
In recent months, Trump has signalled his intent to pressure the Fed to align with his broader economic goals. While it is common for presidents to voice opinions on monetary policy, Trump’s approach appears to target the Fed’s political independence.
Speaking at the World Economic Forum in Davos, Trump demanded lower interest rates. However, Fed chair Jerome Powell reiterated last year that rate decisions would follow the Fed’s timeline, and he has resisted calls to resign.
Markets expect the Fed to maintain current rates between 4.25% and 4.5%, with no cuts anticipated until mid-2025.