Australian shares are set to open higher on Wednesday, with ASX 200 futures up 38 points (+0.43%) at 8:30 am AEDT, following a mixed but telling session on Wall Street overnight. While headline US indices mostly finished lower, underlying market breadth remained constructive — a dynamic that continues to shape risk positioning into a heavy day of local earnings.
Offshore, the S&P 500 slipped 0.3% and the Nasdaq fell 0.6%, but the Dow added 0.1% to notch a second straight record close. More notably, the equal-weight S&P 500 rose again, extending its outperformance of the cap-weighted index and underscoring a rotation away from mega-caps and into more defensive, interest-rate-sensitive pockets of the market.
Wall Street: Defensive tilt, softer data
US markets struggled to hold early gains overnight as investors digested a mix of soft economic data, hawkish-leaning Federal Reserve commentary and renewed questions around AI-driven disruption in parts of the financial and software sectors.
December US retail sales missed expectations for a solid rebound and added to evidence that consumer momentum is cooling. Most retail categories declined, reinforcing the idea that some holiday spending may have been pulled forward rather than sustained.
Bond markets reacted quickly. Treasury yields fell across the curve, with the 2-year yield sliding to around 3.45% — just shy of multi-year lows — as traders nudged up expectations for rate cuts later in 2026. Fed officials, however, pushed back against any near-term easing, stressing patience as inflation and labour-market dynamics continue to evolve.
Equity leadership reflected that tension. Utilities, real estate and materials outperformed, while technology, financials and communication services lagged. The result was a defensive, lower-volume session that still saw capital spread more evenly across the market rather than concentrated in a handful of names.
AI remained a background theme. Concerns around competition and pricing power resurfaced in parts of the wealth management and insurance software space, though some executives — including at major US banks — argued the recent sell-off has been overly broad.
Commodities and currencies
Commodity markets eased after recent strength, though prices remain elevated relative to longer-term averages.
- Gold slipped around 0.6% to just above US$5,000/oz after last week’s sharp rally
- Copper eased close to 1%, paring gains after a strong rebound
- Oil drifted lower, with WTI hovering near US$64/bbl as oversupply concerns offset geopolitical tension
- Iron ore edged back above US$100/t, offering some support to bulk producers
In currencies, the Australian dollar softened slightly to around US70.7c, but continues to hold above the 70c level following the RBA’s recent rate hike and hawkish messaging. Crypto assets were weaker, with Bitcoin and Ethereum both retreating amid a broader risk-off tone.
Back home: Earnings front and centre
Locally, attention turns firmly to a busy day of reporting season.
Commonwealth Bank delivered a solid first-half result, lifting cash NPAT by 6% and increasing its interim dividend, while reaffirming its payout ratio.
CSL, however, dominated headlines late in the session on Tuesday. The stock sold off sharply after announcing the retirement of CEO Paul McKenzie alongside a first-half result that came in below consensus.
The broader market was little changed on Tuesday, but there were some encouraging undercurrents beneath the surface.
ASX and small caps: selective risk returning
The ASX 200 edged higher in the previous session, while the Small Ordinaries outperformed, rising more than 1%. Beaten-down technology names bounced, materials found support from firmer metals prices, and selective small-cap stocks continued to attract interest after last week’s sharp pullback.
Health care and financials were the main drags, reflecting CSL’s late sell-off and lingering AI-related concerns for insurers and brokers. That said, market breadth improved noticeably, suggesting investors are becoming more willing to re-engage — albeit cautiously — after recent volatility.
What to watch today
- Reporting season remains the dominant driver, with results still flowing throughout the day
- China inflation data later this morning could influence commodity sentiment
- US non-farm payrolls tonight loom as the next major global catalyst
With futures pointing higher and defensives still in favour offshore, the local market looks set for a firmer start — but with earnings likely to dictate direction stock by stock rather than sector by sector.