Index Update: The S&P/ASX 200 ended Friday’s session modestly higher, rising 13.50 points, or 0.15%, to close at 8,727.80, as the benchmark index climbed back above its 50-day moving average. The Australian share market recovered from early losses to finish the first trading day of 2026 in positive territory, snapping a four-session losing streak carried over from the end of last year. Despite the daily gain, the index remains down 0.40% over the past five sessions, while it has advanced 6.42% over the past 52 weeks. Market breadth was mixed, with 6 of the 11 sectors closing higher alongside the broader index. Energy stocks led sectoral gains, advancing 0.65% on the day and posting a 1.41% rise over the past five trading sessions.

Macro Update: U.S. real gross domestic product (GDP) expanded at an annualised pace of 4.3% in the third quarter of 2025 (July–September), according to the initial estimate from the U.S. Bureau of Economic Analysis. This followed a 3.8% increase recorded in the second quarter. Owing to the recent government shutdown, this initial release has replaced both the advance estimate that was scheduled for October 30 and the second estimate planned for November 26. The third-quarter growth was driven by higher consumer spending, higher exports, and increased government outlays, which were partly offset by a decline in investment. Imports, which subtract from GDP calculations, also fell.

Top Market Movers: Australian equities were mixed, with DroneShield Limited (ASX:DRO) leading gainers after climbing 8.116% to AUD 3.330, followed by Nickel Industries Limited (ASX:NIC), which rose 7.784% to AUD 0.900, and Deep Yellow Limited (ASX:DYL), up 5.706% to AUD 1.945. On the downside, Northern Star Resources Ltd (ASX:NST) fell 8.605% to AUD 24.430, while Capstone Copper Corp. (ASX:CSC) declined 4.288% to AUD 14.510 and Life360 Inc. (ASX:360) slipped 3.192% to AUD 32.460.

Commodity Update: The U.S. dollar began 2026 on a weak footing after underperforming most major currencies last year, while the yen steadied near 10-month lows as markets awaited key economic data to assess interest-rate trajectories. Gold rose 0.71% to USD 4,371.90, silver gained 2.22% to USD 72.165, and copper increased 0.51% to USD 12,528.75. Brent crude edged up 0.26% to USD 61.07, as investors balanced fresh geopolitical risks against expectations that OPEC+ will maintain its current supply policy.

Our Stance: The S&P/ASX 200’s modest rebound to start 2026, reclaiming its 50-day moving average and snapping a four-session losing streak, suggests improving short-term sentiment, though underlying momentum remains cautious given recent five-day losses. Mixed sector participation highlights selective risk-taking, with energy stocks benefiting from firmer oil prices and geopolitical considerations. Supportive global cues came from stronger-than-expected U.S. GDP growth, reinforcing resilience in consumer demand and government spending, even as investment softened. However, divergent stock-level moves underline ongoing rotation rather than broad-based conviction. Commodity markets provided a stabilising backdrop, with gains in gold, silver and copper offsetting currency uncertainty tied to U.S. dollar weakness. Overall, the market appears constructive but selective, likely remaining sensitive to macro data and policy signals in the early part of the year.

In its latest session, the S&P/ASX 200 Index advanced 13.50 points to close at 8,727.80, supported by a small bullish candlestick formation and strong trading volumes both indicative of sustained investor confidence. On the daily chart, the index continues to trade above its 21-period Simple Moving Average (SMA), which remains a key dynamic support level reinforcing the short-term uptrend. A critical support zone near 8,640 continues to anchor the current bullish structure, and holding above this area is essential for preserving near-term strength. A successful defense of this level would allow the index to consolidate recent gains while reinforcing confidence in its broader upward trajectory. From a weekly perspective, the index is trading comfortably above its 50-period SMA, underscoring a constructive longer-term outlook. Overall, the technical setup suggests scope for continued upside momentum, provided key support levels remain intact.