The Overnight Report: CPI Looms, AUD Surges

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This story features BHP GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: BHP
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

It's not just US technology stocks on the move, with the S&P500 hitting a new all-time record, the USD continued to fall with gold approaching US$5200/oz.

After a risk on rally yesterday, the ASX200 reached a three-month high.

Ahead of the Dec Qtr CPI print at 11.30am (AEST), ASX200 futures are pointing to another up day.

Good Morning,

The ASX200 rose 82 points or 0.92% to 8,942 closing at a 3-month high.

Nine of eleven sectors rose, led by materials and record precious metal prices.

BHP Group ((BHP)) reclaimed top spot as the largest stock on the ASX.

What happened overnight, NAB Markets Today Research extract

The US dollar continued its slide, with the DXY losing -1.3% to its lowest level since March 2022. There was little fresh catalyst and other market moves were generally modest. 

US Conference Board Consumer Confidence was down a sharp -9.7pts, its biggest one month fall in over four years, although from an upwardly revised December. The headline index now sits at its lowest level since May 2014.

The decline was across both present situation and expectations. The expectations index is a little above its post tariff shock lows back in April, but is weak, and noticeably disconnected from the recent resilience in consumption outcomes.

On the labour market, there was further softening. Consumers saying jobs were hard to get rose, and those saying they were plentiful dropped again. The gap between the two fell to 3.1, the lowest since February 2021.

Locally yesterday, the NAB Business Survey saw both business conditions and confidence rose in December, partially retracing falls from the month prior and overall suggesting momentum in the economy remained solid into year-end.

In FX, Japanese Finance Minister Satsuki Katayama said alongside the G7 that officials will take action in line with a US-Japanese FX agreement, but yen outperformance was more modest on Tuesday, with the USD move broad-based. USDJPY lost another -1%, down to 152.71, its lowest since late October.

The USD lost -1.3% on the DXY, to its lowest level since March 2022 and many currencies made new multi-year highs against the dollar. GBP is 0.8% higher, currently not far from its intraday high of 1.3791, its highest since October 2021.

EUR is 0.8% higher, near its intraday high of 1.1990, its highest since June 2021. NZD was back above 60c and at its highest level since July. The AUD is currently trading 1.39% higher at 0.7011 surpassing its September 2024 high of 0.6942 to be its highest since February 2023. 

In rates markets, US yields 10yr were little changed from Sydney’s close and 1bp higher over the day at 4.23%. The curve was modestly steeper, with a small fall in 2yr yields gaining some succor from the soft consumer confidence data.

In equities, the S&P500 is on track for a 0.04% gain and reached a new record high as investors look ahead to several Magnificent Seven results later this week. Microsoft, Meta Platforms and Tesla report earnings after hours on Wednesday, followed by Apple on Thursday. Gains on Tuesday were far from broadbased.

The Dow was lower even as the S&P500 rose, with utilities and IT leading gains but healthcare and financials sliding. The Nasdaq rose 0.9% higher. Major health insurance stocks sank after The Wall Street Journal reported the Trump administration is proposing roughly flat rates for Medicare insurers next year.

Oil prices gained, Brent was up 3% to US$67.57 and WTI gained 2.9% to US$62.39, the highest since October. The weaker dollar, concern about US military presence near Iran, and the fallout from the winter in the US are all likely playing a role.

Trump reiterated on Tuesday that a “flotilla” was headed to the Middle East, adding that he’d “rather not see anything happen.”

US natural gas futures retreated on Tuesday following a powerful rally due to the cold snap, as did diesel futures in New York. Gold gained another 1.6%, holding above US$5000.

Australia December CPI. NAB expects 3.7% yoy for December headline inflation, a tenth above consensus. Most focus will be on Q4 trimmed mean. We expect 0.9% qoq and 3.3% yoy, above the RBA’s November forecast of 0.75%/3.2%. Consensus is also 0.9% qoq, though the distribution of analyst forecasts skews lower.

The FOMC is widely expected on hold after three consecutive cuts (Thursday morning AEST). The announcement is 6am Sydney time Thursday.

Markets have a cumulative -8bp of cuts over the next three meetings, and -20bp priced for June.

With no new forecasts and policy ‘well positioned’, independence questions may well dominate the press conference.

Joe Cavatoni, World Gold Council 

-Gold’s move to US$5,000 reflects a combination of investor repositioning, persistent geopolitical uncertainty, and continued demand for portfolio resilience. Investors who were under-allocated to gold are rapidly revisiting their assumptions, and that reallocation has driven prices higher at a faster pace than many traditional valuation models anticipated.

-Gold has moved up over US$500 in the last 30 days, which speaks less to speculative excess and more to how quickly sentiment has shifted. That said, the rally has also come with elevated short-term volatility which is a sign that markets are still adjusting to what a higher long-term gold price environment looks like.

-The biggest risk to gold would be a meaningful improvement in global risk sentiment, particularly if economic growth strengthens without added geopolitical tension. A clearer path to stable growth, lower uncertainty, and renewed confidence in policy coordination could reduce the urgency for defensive assets.

-Rising interest rates, a stronger US dollar, or a sustained shift back toward risk assets could also slow gold’s momentum. That said, none of those conditions currently appear firmly in place, which helps explain why gold remains well supported.

-If current conditions, like elevated uncertainty, disruptive policy dynamics, and ongoing investor demand for diversification persist, gold could remain comfortably above recent highs and continue to test new levels in 2026.

However, the pace matters. A gradual move higher is more sustainable than a rapid surge.

Short-term pullbacks or periods of consolidation would not be unusual and could actually help reinforce a higher long-term price environment.

Time to Sell America? Yardeni Quicktakes extract

The financial press was flooded with “American Exceptionalism” narratives throughout 2023 and 2024, and into early 2025. The April 15, 2024 cover story of The Economist was titled, “Riding High: The lessons of American exceptionalism.” On May 25, 2024, the cover story of The Economist was “The almighty dollar.” It focused on the dollar’s enduring global dominance.

The “Sell America” trade —the contrarian bet that the multi-year era of American economic and market outperformance is finally ending— began gaining significant traction in the financial press late in 2024 and accelerated in 2025. Last year, the US dollar was weak, and the US stock market underperformed the All Country World ex-MSCI stock price index.

The consensus view was that global investors were selling their US stocks and bonds to buy more of such securities in Europe, Japan, and emerging markets. Soaring precious metals prices last year and so far this year are giving the Sell America trade even more credibility, as is the weak dollar, which seemed to be finding support above its rising uptrend line. It edged below it today (Monday) as the yen bounced from its recent fall.

We had championed a Buy America investment strategy (which we called “Stay Home” rather than “Go Global”) since 2010. It worked very well, as evidenced by the uptrend in the ratio of the US MSCI to the All Country World ex-US MSCI in both local currency and dollar terms.

On December 7, 2025, we recommended moving from Stay Home toward Go Global. We don’t view it as a Sell America call, but rather as a rebalancing call.

We still believe in American Exceptionalism, but that’s been fully discounted by the rising market-cap share of the US in global portfolios from 45% in 2010 to 65% in 2025. Overseas stock markets are cheaper and include lots of exceptional companies. Emerging markets are especially appealing.

Now, let’s examine the relevant data to assess the Sell America trade. The US Treasury compiles data on net capital inflows. Over the past 12 months, through November 2025, foreign official accounts sold -US$51 billion in US securities, but private foreign accounts purchased US$1.5 trillion in the US capital markets, near a recent record high.

Private foreigners purchased a near-record US$664 billion in US equities and a whopping US$949 billion in US bonds over the past 12 months

Over the past four quarters through Q3-2025, foreign direct investments in the US totaled US$324 billion. Over the next few years, foreign direct investment could increase significantly if recent commitments made to President Donald Trump by foreign companies and countries are realized.

Foreign official holdings of US dollar reserves by central banks have been quite steady at around US$7.0 trillion dollars since 2014, according to the IMF. The same can be said for foreign official holdings of US Treasuries, which have been hovering around US$4.0 trillion since 2012.

The IMF data show that international gold reserves (based on national valuations) have increased significantly over the past couple of years. Much of that increase may be due to the sharp rise in gold prices over that period. (Contrary to the popular notion, foreign official accounts still hold more US Treasuries than gold.)

Finally, foreigners altogether own a record US$9.4 trillion in US Treasuries. There is no sign of Sell America trades in the data.

Then again, this analysis does not examine whether US investors are selling US securities to buy foreign ones. We are working on that analysis. Stay tuned.

Corporate news in Australia 

-AUB Group ((AUB)) is acquiring UK broker Prestige in a -$432m transaction and launches $400m equity raising

-Glencore’s bribery lawsuits are a risk to the merger talks with Rio Tinto ((RIO)) 

-Lincoln Place to go on sale in March with developers and private equity firms expected to bid

-Steel Dynamics CEO blames BlueScope Steel ((BSL)) for rejecting the $30 per share takeover bid

-Amazon is teaming up with Harris Farm to challenge Woolworths Group ((WOW)) and Coles Group ((COL)) in fresh food delivery

-Humm Group ((HUM)) is under takeover panel review over alleged takeover bid mishandling and related-party stock dealings

-Dan Loeb’s hedge fund Third Point is reported as trying to force CoStar Group to change board directors and restructure operations

-Galan Lithium ((GLN)) raises $40m after the share price triples in last year

-Anthropic is set to raise US$20bn which would value the company at US$350bn

On the calendar today:

-AU Dec CPI

-US Fed MonPol Decision

-ATLAS ARTERIA ((ALX)) 4Q Traffic Update

-BEFOREPAY GROUP LIMITED ((B4P)) Dec Qtr Activity

-BOSS ENERGY LIMITED ((BOE)) Dec Qtr Activity

-CORONADO GLOBAL RESOURCES INC ((CRN)) Dec Qtr Activity

-DRONESHIELD LIMITED ((DRO)) December Qtrly briefing

-GREATLAND RESOURCES LIMITED ((GGP)) Dec Qtr Activity

-WOODSIDE ENERGY GROUP LIMITED ((WDS)) 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.

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