The Overnight Report: Buying The De-Escalation

Array
(
    [0] => Array
        (
            [0] => ((BM1))
            [1] => ((ANZ))
            [2] => ((MAF))
            [3] => ((AEL))
            [4] => ((AIA))
            [5] => ((AMH))
            [6] => ((FMG))
            [7] => ((FPR))
            [8] => ((HGO))
            [9] => ((IFL))
            [10] => ((NST))
            [11] => ((NWL))
            [12] => ((PNR))
            [13] => ((RMS))
            [14] => ((RRL))
            [15] => ((RSG))
            [16] => ((S32))
            [17] => ((SFR))
            [18] => ((STO))
        )

    [1] => Array
        (
            [0] => BM1
            [1] => ANZ
            [2] => MAF
            [3] => AEL
            [4] => AIA
            [5] => AMH
            [6] => FMG
            [7] => FPR
            [8] => HGO
            [9] => IFL
            [10] => NST
            [11] => NWL
            [12] => PNR
            [13] => RMS
            [14] => RRL
            [15] => RSG
            [16] => S32
            [17] => SFR
            [18] => STO
        )

)

This story features BALLARD MINING LIMITED, and other companies.
For more info SHARE ANALYSIS: BM1

President Trump's de-escalation of geo-political tensions at Davos underpinned a volatile US session, with indices rallying in the last hour of trade.

After a third straight losing session, ASX200 futures are pointing to a 0.5% recovery ahead of the December labour data at 11.30am AEST.

Good Morning,

With a weak offshore lead, yesterday the ASX200 fell for a third straight session, down -33 pts or -0.4% to 8.783.

Consumer discretionary fell -2.1% with financials weighing most on the index.

Materials, including the gold sector, rallied 2.5%.

What happened overnight, NAB Markets Today Research extract

Davos and Geopolitics has been in the driver’s seat again over the past 24 hours. An early rally in US equities had lost some ground until Trump posted that a ‘framework for a future deal’ had been reach on Greenland.

That sent the S&P500 sharply higher, up around 1.5%, not quite retracing yesterday’s falls.

Across currency markets, the USD got a small boost from the developments, paring week-to-date losses. The AUD outperformed.

Donal Trump spoke in Davos. He said the US wouldn’t use force to acquire Greenland “I don’t have to use force. I don’t want to use force. I won’t use force”.

Even so, he said he is seeking immediate negotiations and warned that “You can say yes, and we will be very appreciative, or you can say no, and we will remember.”

In the last hour, Trump posted on Truth Social “we have formed the framework of a future deal with respect to Greenland” and the higher tariffs would not go ahead on 1 February based on discussions with Rutte, secretary General of NATO,

The European Parliament decided to freeze a ratification vote on the earlier trade deal with the US, putting on hold plans to cut tariffs on US imports. A move that had been widely anticipated.

ECB’s Lagarde said “uncertainty is back” but said that “We have an inflation that would be very slightly affected, probably to the upside, but as we have inflation under control at 1.9%, the impact would be minimal.”

Joachim Nagel, a senior central banker in Europe said price stability picture is opaque, and he is more concerned on the growth side than on inflation.

In the US, the Supreme Court heard arguments on the Lisa Cook case. Reporting generally highlights justices were concerned about the implications for Fed independence.

The WSJ headlined the ‘Supreme Court Appears Likely to Let Fed’s Cook Keep Her Job’ . Prediction markets sharply pared the odds that Lisa Cook would be removed by the end of the year, from around 30% to less than 15% according to Kalshi.

In the UK, CPI was 3.4% yoy, a tenth above expectations, with the acceleration driven by tobacco and airfares. Core inflation was 3.2%, a tenth below consensus. There was little market reaction, with base effects set to pull CPI lower through early 2026. 

In FX, the USD got a late boost from the framework agreement headlines, but even so is up 0.4% against the euro at 1.1685. The AUD outperformed, touching 0.6778 intraday, its highest level since October 2024, and currently sits around 0.6757.

In rates markets, US yields 10yr were modestly lower and the curve a little flatter. US 10yr yields are currently around the bottom of their overnight range of 4.25-4.30%, -2bp below the Sydney close and -4bp lower over the day.

Europe outperformed, with German 10yr yields 2bp higher. There were bigger moves in Japan after yesterday’s selloff. JGB 10yr yields were -6bp lower at 2.28%, but still 10bp higher than the end of last week. 30yr yields -14bp lower at 3.72%, but still 23bp higher than the end of last week.

US equities whipsawed through the session as markets digested geopolitical developments. The S&P500 was up nearly 1% earlier in the session after Trumps remarks. Most of those gains were pared, before again reversing higher on the framework deal news. The S&P500 finished 1.18% higher, paring much of yesterday’s -2.1% decline.

Oil prices were marginally higher, Brent up 0.5% to US$65.23. The IEA increased its forecast for global oil demand growth in 2026, slightly trimming a projected supply glut, but projections still leave oil markets facing excess supply. 

Gold pared gains as risk sentiment turned positive following the framework deal announcement to be broadly flat over the day.

Australian labour data are due out at 11.30am AEST and NAB expects the December unemployment rate steady at 4.3% in December on an employment gain of 40k, anticipating some payback from surprising softness in recent months.

The prospect of a sharper rebound in participation leaves the risk skewed to a rise in the unemployment rate, and the skew of analysts in the BBG survey is firmly higher: 13 at 4.3, 9 at 4.4%, and 3 at 4.5%. The RBA saw unemployment at 4.4% in Q4 at the Nov SoMP.

As we flagged after the November data, the outgoing eighth of the sample had a 0.4ppt higher unemployment rate and -1.2ppt lower employment rate than the full sample average.

Employment data are inherently volatile, but that leans against the risk of a soft print in the month.

ANZ Bank, Australian Morning Focus, commodities extract

Gold extended recent gains as investors seek out haven assets amid a challenging geopolitical backdrop. Following yesterday’s strong gains after the Japanese bond selloff, gold started the session strongly as investors pined about the impact of a trade war over the US pursuit of Greenland.

A rebuke from European leaders was immediate. EU lawmakers also paused the implementation of a trade deal with the US after Trump’s threats over Greenland. However, tensions eased later in the session after Trump said the US doesn’t want to use excessive force to get Greenland. He also said that the US is seeking immediate talks on acquiring the Arctic island, casting it as essential to collective security and downplaying the danger it would pose to NATO.

Following his speech at Davos, he said he wouldn’t impose tariffs on several European nations after he reached the “framework of a future deal” on Greenland and the Arctic region with NATO Secretary-General Mark Rutte. This saw the USD waver, with investors also pulling back on haven buying. Gold subsequently gave back some of the gains achieved earlier in the session.

Industrial metals including copper rallied alongside gold. This followed signs of tightness. On Tuesday spot copper prices surged to trade at a huge premium over later-dated futures on Tuesday. The Tom/Next spread, the difference between spot and futures expiring tomorrow, spiked to US$100/t, one of largest ever seen in pricing records starting 1998.

However, the spread tightened rapidly to close around US$2/t on the back of expected deliveries of metal into exchange warehouses eased concerns of tightness. This metal is likely to come from privately held stock that could be readily moved into its warehouses across Asia, the US and Europe. Nevertheless, the ongoing supply side issues are unlikely to ease longer term concerns about tightness. This is currently being exacerbated by fears of additional US tariffs on refined metals, which has seen metal flowing into the US, thus tightening supplies in the rest of the market.

Crude oil prices were steady as traders took stock of the geopolitical backdrop. Trump’s demands to acquire Greenland and calls for peace in the Ukraine continue to dominate discussions in the market. In his Davos speech, Trump said that Russia and Ukraine are at a point now where they can come together and get a deal done. An end to the war would likely result in US sanctions on Russia being removed, which would limit disruptions to supplies.

However, sentiment was boosted by a slightly more positive outlook from the International Energy Agency. It increased its forecast for global oil demand growth in 2026 for a third consecutive month. World consumption will now grow by 930kb/d, the IEA stated in its latest monthly report. Stockpiles are theoretically on track to rise by 3.7mb/d this year, according to this assessment. However, IEA cautioned that the actual overhang may not reach these levels.

European natural gas prices rose sharply amid concerns of increased competition in the LNG market. Colder temperatures in Asia are threatening to raise demand for natural gas. This was exacerbated by a record rally in US Henry Hub natural gas prices. Europe has had a relatively mild start to winter, but it’s also facing falling temperatures that could eat into inventories. North Asia LNG prices also gained amid concerns of stronger demand.

Corporate news in Australia 

-Ballard Mining ((BM1)) launches $60m capital raising

-Cashrewards pushes back after ANZ Bank ((ANZ)) closure under Matos

-UK government takes GBP25m stake in Kraken to support London listing

-MA Financial ((MAF)) has created a potential $100m warehouse facility to support US Fundbox as it expands into Australia

On the calendar today:

-AU Dec Unemployment Rate

-JP Dec Trade

-US 3Q GDP (updated)

-US Oct/Nov PCE Inflation

-US Weekly Jobless Claims

-AMPLITUDE ENERGY LIMITED ((AEL)) Dec Qtr Activity

-AUCKLAND INTERNATIONAL AIRPORT LIMITED ((AIA)) Dec Traffic Update

-AMCIL LIMITED ((AMH)) 1H26 Earnings

-FORTESCUE LIMITED ((FMG)) Dec Qtr Report

-FLEETPARTNERS GROUP LIMITED ((FPR)) AGM

-HILLGROVE RESOURCES LIMITED ((HGO)) Dec Qtr Activity

-INSIGNIA FINANCIAL LIMITED ((IFL)) 2Q26 Flows Report

-NORTHERN STAR RESOURCES LIMITED ((NST)) Dec Qtr Activity

-NETWEALTH GROUP LIMITED ((NWL)) Dec Qtr Update

-PANTORO GOLD LIMITED ((PNR)) Dec Qtr Activity

-RAMELIUS RESOURCES LIMITED ((RMS)) Exploration Update

-REGIS RESOURCES LIMITED ((RRL)) Dec Qtr Activity

-RESOLUTE MINING LIMITED ((RSG)) Dec Qtr Activity

-SOUTH32 LIMITED ((S32)) Dec Qtr Activity

-SANDFIRE RESOURCES LIMITED ((SFR)) Dec Qtr Activity

-SANTOS LIMITED ((STO)) Dec Qtr Activity

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

The Australian share market over the past thirty days…

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website.  Click here. (Subscribers can access prices on the website.)

(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author’s and not by association FNArena’s – see disclaimer on the website)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms