Investors are worried that US President Donald Trump’s insistence on owning Greenland will break the NATO alliance and the post-WWII world order, triggering tit-for-tat tariffs. Equities, bonds and the US dollar were dumped - a rare triple sell-off of assets, which investors have called the “sell America” trade. Some global leaders are starting to push back. At Davos over the past 48 hours, Canadian Prime Minister Mark Carney said the world order was breaking, and French President Emmanuel Macron vowed not to give in to bullies.

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News in brief

The federal Coalition is in tatters after Nationals leader David Littleproud and all the party’s frontbenchers joined three rebel MPs in quitting their positions in the shadow ministry after they broke cabinet solidarity on Tuesday night over the gun and hate speech legislation. It is likely the Coalition will now split, handing a gift to the government and One Nation.

Australian house and unit prices hit record highs to end 2025, with Perth becoming the sixth capital city to hit the million-dollar club, and Melbourne finally in recovery mode. See the list of median house prices for each city at the end of the newsletter.

The battle between Commonwealth Bank and BHP to take the title of Australia’s largest company is getting very tight, with the bank now just $1 billion, or less than half-a-percent, bigger than the miner.

Rio Tinto has warned that stockpiles of iron ore at Chinese ports are rising, as strains between the miner and its biggest buyer emerge. The miner’s iron ore division shipped a record volume over the past three months.

Former Australian cricket captain Steve Waugh, and current players Steve Smith and Mitch Marsh, are in a long list of investors buying into a new tournament known as the European T20 Premier League.

Fear-o-meter

There’s much more at stake than bragging rights when it comes to the battle between BHP and Commonwealth Bank to hold the title of the ASX’s largest company. If the world’s biggest miner can overtake the one-time world’s most expensive bank, then it is quite a turnaround. Less than a year ago, CBA was 50 per cent bigger than BHP in terms of market capitalisation.

For shareholders, it is a tale of being in the right stock in the right sector. Commonwealth Bank was, according to investment analysts, overpriced for much of last year. It had surged on the back of offshore money looking for a home in the local market. It hit a peak of $192 a share in the middle of last year even though it was not much different to the other banks. Pricing had become irrational.

Yesterday it closed 23 per cent below its peak at $147.22. What’s notable is that other big banks have done nowhere near as poorly. Westpac and ANZ are currently trading close to record highs.

BHP’s share price slid from late 2023 until April of last year. Since then, it is up more than 40 per cent as commodity prices surged. The miner’s share price is still below its peak of late 2023. It suggests a more orderly run up in BHP, than what occurred in CBA.

Fear & Greed Q+A today

On the 'Sell America' trade, and where investors are putting their money:

 

“Let’s be clear about what happened. We had threats around Greenland, the US market was closed for Martin Luther King Day, and when it reopened we saw a pretty dramatic response. The Nasdaq was down nearly two and a half per cent, the S&P 500 was down about two per cent. It looked quite dramatic, but it’s worth noting the market had been closed for longer than usual, so you tend to see these jumps when people have had more time to think about what the news might mean. At the same time, we saw interesting moves in bonds, some of that coming out of Japan rather than the US, weakness in the US dollar, and on the other side of that this extraordinary rally in gold continuing. That’s where people are saying there’s a significant global shift underway, with investors looking for safe havens and feeling less comfortable being exposed to risk assets and, frankly, to the US.”

Greed-o-meter

The Australian housing market has now had twelve consecutive quarters of growth, according to Domain's December Quarter House Price Report. And in Perth's case, the December quarter was particularly strong, taking median values well over the million-dollar threshold.

Source: Domain

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