Blog week ending, 23rd January 2026
Markets:
- Local and global stock markets weakened on rising geopolitical tensions as Greenland’s sovereignty remained in the crosshairs along with higher tariff threats.
- Japan’s ten-year bond yield jumped to a twenty-seven year high on fiscal concerns as PM Takaichi pushes forward with her fiscal stimulus plans.
- In local stock news, BHP produced 69.7 million tonnes of iron ore in its second quarter, up 5% on the same period a year ago, reaffirming its annual production guidance. However, the miner also announced another cost increase at its Jansen potash project, lifting the estimate to $8.4 billion.
- Origin shares rose after the company extended the life of the Eraring coal-fired power station to 2027.
- Lynas Rare Earths shares rose sharply, recovering some of December’s losses, after the company reported strong December quarter revenues. Higher commodity prices offset a 30% drop in production due to power outages.
- Iron ore prices fell for several consecutive days on concerns about oversupply after Beijing confirmed a substantial drop in steel output. China’s steel production shrank by more than 4% in 2025.
- Gold prices surged as investors flocked to safe-haven assets following rising geopolitical tensions. Gold prices now sit just below US$5,000 per ounce.
- The Australian dollar pushed through the US68c mark, supported by a strong local jobs report and downward pressure on the US dollar.
Economics:
- The International Monetary Fund raised its 2026 global growth forecast to 3.3%, citing adaptability to lower US tariffs and continued investment in AI. Their 2027 growth forecast remained unchanged.
- Australian full-time employment increased by 54,800 in December which saw the unemployment rate fall from 4.3% to 4.1%, coming in well below market expectations and marking the lowest rate since May.
- The US economy expanded at an annualised rate of 4.4% in the September quarter, slightly above the initial estimate, marking the strongest growth since the September quarter 2023. Firmer consumer spending, a rebound in exports, and higher government spending assisted.
- The US central bank’s preferred measure of inflation increased 0.2% in November, unchanged from October and in line with expectations. On an annual basis, inflation edged up to 2.8% in November versus their 2% target.
- US jobless claims in the US fell against expectations of a significant increase, to mark the second-lowest reading in two years. The US labour market has both relatively low firing and low hiring at present.
- US industrial production rose 0.4% in December, the same as in November and above market expectations. Manufacturing output increased 0.2%, beating forecasts for a drop.
- A key US housing market index fell in January, coming in below expectations. The January reading was the weakest in three months, signalling continued challenges in the US housing market. Builder sentiment deteriorated whilst pending home sales fell sharply.
- Eurozone inflation eased to 1.9% in December, down from 2.1% in November and slightly under expectations. It marked the first time since May that inflation has come in below the European Central Bank’s 2% target.
- China’s economy grew 1.2% in the December quarter, beating market expectations of 1% and following a 1.1% increase in the previous quarter. The December result marked the fastest expansion in three quarters. Chinese exports drove a third of China’s 2025 growth, masking continued weak domestic demand.
- Chinese data remains weak and mixed with December retail sales growing at their slowest rate in three years, while industrial output growth accelerated, and the unemployment rate stood at 5.1% for the third straight month.
- The Chinese central bank kept key lending rates at record lows for an eighth consecutive month in January, in line with market expectations.
- The Chinese government announced incentives to spur investment and consumption, including a five hundred billion Yuan loan guarantee facility to encourage private companies to borrow for growth.
Politics:
- US President Trump announced plans to impose tariffs of up to 25% on Denmark and seven other EU/NATO countries until an agreement was reached for the purchase of Greenland. The EU held an emergency meeting and considered suspending their trade deal with the US. Trump later withdrew tariff threats after both sides agreed on a framework plan.
- The Trump administration agreed to lower tariffs on Taiwan to 15% as part of an agreement in which Taiwanese semiconductor makers increase financing for American operations by US$500 billion.
- US President Trump delayed a decision on striking Iran while consulting domestically and with allies on the timing and potential impact.
- Japan’s new Prime Minister has officially called an early election for February 8, aiming to capitalise on her high personal approval ratings and secure a national mandate to pursue expansionary fiscal policies.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
