US sharemarkets finished last week modestly weaker, with investors navigating political uncertainty, Federal Reserve leadership questions and shifting geopolitical risks. The S&P 500 eased 0.06% on Friday to close at 6,940.01, leaving the benchmark down 0.4% for the week. The Nasdaq Composite slipped 0.06% to 23,515.39 and fell 0.7% over the week, while the Dow Jones Industrial Average dropped 83 points, or 0.17%, on Friday and ended the week 0.3% lower.
Market sentiment softened after comments from US President Donald Trump reignited concerns about the future independence of the Federal Reserve. Investors reassessed expectations around who might succeed current Fed chair Jerome Powell, with uncertainty over the policy stance of the next chair weighing on risk appetite.
Chips strong, banks drag
Despite the cautious tone, technology stocks provided some support earlier in the week. Semiconductor shares rallied after Taiwan Semiconductor Manufacturing Company reported strong quarterly results and following news of a US–Taiwan trade agreement that will see Taiwanese chipmakers invest at least US$250bn in US manufacturing capacity. Gains in chip stocks helped US markets avoid steeper losses.
In contrast, financial stocks underperformed. Bank shares weakened over the week as investors considered the potential impact of proposed caps on credit card interest rates. JPMorgan Chase and Bank of America both declined about 5% over the week, offsetting strength elsewhere in the market.
Geopolitics and policy in focus
Investors also grappled with a steady flow of geopolitical headlines, including renewed tariff threats linked to disputes involving Greenland and broader tensions in Iran. These developments added to market volatility and reinforced a defensive tone into the end of the week.
Attention is now turning to the World Economic Forum in Davos, where President Trump is expected to outline priorities for the year ahead. Markets are particularly focused on speculation around a potential US housing stimulus package, which could have implications for construction materials and housing-related stocks.
Australian market outlook
Closer to home, Australian shares are set to open little changed, with futures indicating the S&P/ASX 200 will ease by around one point at the start of Monday’s trade. The local market closed last week at 8,903.90, its longest winning streak in eight months, as strength in bank and technology stocks outweighed profit-taking in miners.
The key domestic focus in the week ahead will be the release of Australian employment data. The figures are likely to influence expectations for the Reserve Bank of Australia ahead of its February policy meeting, as investors assess whether the central bank will hold rates steady or consider another increase.
