The ASX finished in the red on Friday but looks set to start the week in the green following a rally on Wall Street on Friday. Miners will also be in the spotlight with China’s economy growing by 5% for the full year 2024, meeting the government’s growth target and beating analysts’ expectation of 4.9% growth.
US Stocks finished their best week since November, with the S&P500 rising 1% on Friday, giving the index a gain of 2.9% for the week. Nvidia and Tesla led gains in mega caps, while Intel Corp. jumped 9.2% on a report that the chipmaker is an acquisition target of a huge ‘unnamed’ organisation. US banks also stole some of the limelight last week, with all the big names delivering beats and trading gains after a strong year for markets in 2024.
Three things to watch for the week ahead:
- Trump Inauguration
The highly anticipated inauguration of President-elect Donald Trump, which takes place Tuesday morning, is set to make waves on the stock market. Trump’s administration will bring new challenges for investors, particularly with the fear of inflation set to rear its head.
Trump’s proposed tariffs are likely to make exports more expensive to import into the US. This is particularly true for Chinese goods, with Trump preparing to enforce tariffs of up to 60% on Chinese exports.
Sectors such as energy and healthcare are also expected to experience some volatility. Energy stocks may be influenced by changes in environmental policies implemented during Trump’s administration, while healthcare stocks could be impacted by potential government healthcare reforms. Conversely, with a pro-crypto president and SEC chair in place by 2025, there will likely be a more favourable environment for crypto assets. Clearer regulations are expected to encourage greater adoption of this asset class.
Ahead of this week’s inauguration, Australian retail investors have already begun to adjust their portfolios in preparation for Trump taking office, with our most recent Retail Investor Beat data indicating that 45% of Australian retail investors saying they plan to – or already have – adapted their portfolio based on Trump’s election victory. Of these retail investors, 70% are taking advantage of the president-elect’s pro-crypto stance by increasing their investments in crypto, while 46% have planned to increase their investments in US stocks.
- Miner Updates
Mining investors will be gearing up for an eventful few weeks, with many mining companies set to deliver their production results and earnings reports. This week, Fortescue will deliver its quarterly production report, while BHP will deliver its operational review for the second half of 2024 on Tuesday. This week’s updates follow the news of Rio Tinto’s potential merger with Glencore which could create a mining powerhouse.
Last week, Rio Tinto released its Q4 production results, with its solid production update sending shares higher on Thursday. Despite iron ore shipments falling, mined copper surged 26% as it continued to ramp up output at its mine in Mongolia. Other mining giants, including BHP and Fortescue, also had their share prices climb last week after iron ore prices rose back over US$100 per tonne, with inventories falling and a general boost in optimism in China.
Production continues to increase for these large miners, but China’s recovery is still yet to kick into full gear despite multiple stimulus packages. There is an expectation China will roll out a hefty stimulus package at the start of this year to offset increased tariffs by Donald Trump. Those very tariffs could have an impact on miners, which would dampen profits despite higher production.
- Netflix Earnings
Next Tuesday in the US, Netflix will be releasing its Q4 2024 earnings. The streaming platform forecasts a 14.7% YoY increase in revenue from $8.83 billion to $10.13 billion. According to analyst estimates, Netflix is set to add 10 million new subscribers in Q4, which would bring its global user base past 292 million and represent almost double the platform’s new subscriber growth in Q3, cementing its place as the leader of streaming platforms.
This strong growth is thanks in part to the release of the highly anticipated second season of Squid Game. The Korean thriller series is one of the streamer’s most iconic properties and – given the latest season was released on Boxing Day, the first-week streaming numbers are likely to provide a boost across both last quarter’s and this quarter’s earnings. Additionally, a third season of the series is rumoured to be released in mid-2025. However, it’s not just about TV series anymore. Netflix is making big moves in live sports with Tyson vs Paul and NFL games last year, and WWE this year. This looks set to drive higher ad revenue and keep drawing subscribers to the platform.
This earnings report will be significant as it represents the last time Netflix will disclose subscriber numbers in its earnings. Instead, it will report engagement figures (essentially the total time viewers have spent with the service), claiming it is the “best proxy for customer satisfaction”.
Investors reaped the rewards last year, with shares up over 80% and climbing almost 150% since a low in October 2023. For that to continue this year, we’ll need to see its user base continue to expand, which should drive ad revenue and boost margins. At the same time, its content lineup needs to keep delivering in order for consumers to justify higher prices. Netflix is the undisputed streaming leader, and that position is likely to keep driving growth.
*Data Accurate as of 16/01/2025
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