Josh Gilbert, market analyst at eToro, shares his three things to watch in Australia in the coming days.
Tech earnings (Amazon, Alphabet, AMD)
Another big week for tech investors is on the horizon, with Amazon, AMD and Alphabet all announcing their earnings reports this week.
Chinese AI tech startup DeepSeek caused investor panic last week after introducing their low-cost AI model and the resulting impact on US tech stocks means this week’s earnings reports and mentions of AI ventures will undoubtedly be watched closely.
Investors will be looking for certainty in the future profitability of these tech giants’ AI ventures, with the price point and advanced technical abilities of DeepSeek’s AI model R1 leading many investors to question if US tech companies were beginning to fall behind in the AI race.
While this sell-off was most felt by NVIDIA, AMD shares also fell to a one-year low last week after losses attributed to DeepSeek. Alphabet shares dropped around 4% during this time, while Amazon was less impacted by the sell-off, only down about 1% at its lowest point.
However, despite these losses, savvy investors will likely see this sell-off as an opportunity, with the market overreacting to the news. Earnings this week will be key to putting shares back on the straight and narrow.
For Amazon, the focus will be on AWS and cloud revenue. The same can be said for Alphabet with Google Cloud but investors will want to hear more about how Gemini contributes to its bottom line, while capex will also be a focus for both these companies.
For AMD, the focus will be on its data centre segment, which has continued to lag behind rival NVIDIA. DeepSeek’s cost-effective model in the market will also be very much in focus.
AU retail sales
January’s CPI data release provided a glimmer of optimism for Aussies who have weathered more than a year of sustained high interest rates while many of our economic allies have begun cutting interest rates.
That reading has market pricing in a 91% chance that the Reserve Bank of Australia (RBA) will cut rates in February, a huge shift from the start of the year. All eyes are on complementary data that could further support the argument for a 25 basis point cut and that comes in the form of retail sales data this week.
Data at the start of the year indicated that Black Friday didn’t provide the blockbuster spending spree many retailers were banking on.
The lower-than-expected gain in November raises concerns over December’s numbers, particularly as data in previous years has shown consumers have been spending earlier, buying on Black Friday rather than in the holiday period.
Based on this data trend, poor Black Friday sales would indicate that we’re in store for an even more underwhelming December result.
It’s clear that many Australians are still far from splurging and November’s data shows we’re unlikely to get any real surprise in December, only cementing the argument that it’s time for the RBA to consider monetary easing.
Non-farm payrolls
US job data will be an interesting metric in the coming months, with freshly inaugurated President Donald Trump committing to sweeping job slashes within the public service sector.
From the newly-minted Department of Government Efficiency to DEI crackdowns, it’s expected that — should much of this come to fruition — there’ll be fewer jobs across the sector and plenty of people looking for work.
Last month’s data, though, showed the labour market remained remarkably resilient. The unemployment rate fell to 4.1% from 4.2% the month prior, while the economy added 256,000 jobs versus the 160,000 markets expected.
This was just one of the reasons the Federal Reserve left rates on hold last week. Jerome Powell pointed to strength in the labour market and stubborn inflation as the reasons for leaving rates unchanged.
All in all, the US economy has shown resilience and remains in good shape. This week, markets expected 205,000 job additions but if last month’s reading was anything to go by, we could expect to see a higher number than that. If that is the case, rates will stay higher for longer, with markets only pricing in two rate cuts in 2025.