US equities finished higher on Monday as investors balanced rising political tensions against a busy week of corporate earnings and the first Federal Reserve policy decision of the year. The S&P 500 rose 0.5 per cent to 6,950, while the Dow Jones gained 0.6 per cent to close above 49,400. The Nasdaq added 0.4 per cent, supported by gains in large technology stocks.
Technology leaders lift the Nasdaq ahead of results
Big tech provided much of the momentum, with shares in Apple, Meta Platforms and Microsoft advancing ahead of earnings later in the week. Investors are positioning for results from several members of the so-called Magnificent Seven, including Microsoft, Meta and Tesla on Wednesday, followed by Apple on Thursday.
Trade and Washington tensions linger in the background
Markets continued to monitor political developments after President Donald Trump threatened steep tariffs on Canadian imports if Ottawa pursued a trade agreement with China. Canadian officials responded by ruling out any such deal, helping ease immediate market concerns. At the same time, investors are watching Washington closely amid renewed risks of a US government shutdown tied to disagreements over Homeland Security funding.
Gold surges as investors seek safety
Precious metals surged as investors sought protection from political and fiscal uncertainty. Gold briefly pushed beyond US$5,100 an ounce to a new record high, while silver extended a powerful rally driven by strong investment demand and speculative momentum.
Earnings season and the Fed in the spotlight
More than 90 S&P 500 companies are due to report this week, with early results pointing to a solid earnings season. Around three-quarters of reporting companies have exceeded expectations, although some stocks have still fallen despite positive results. On the policy front, the Federal Reserve is expected to leave interest rates unchanged on Wednesday, with markets focused on guidance around future cuts. Traders are currently pricing in two quarter-point reductions by the end of 2026.
Australian market outlook
Australian shares are poised to open higher following a three-day break, supported by a powerful rally in precious metals. ASX 200 futures are pointing up 39 points, or 0.4 per cent, to 8,867.
NAB will release its December business confidence and conditions survey later today. Offshore, attention turns to US consumer confidence data overnight, followed by the Federal Reserve decision early Wednesday morning AEDT.
