Markets were volatile this week, but resilience remained a key theme beneath the surface. Major US equity indices swung sharply during sessions, yet managed to claw back losses and finish well above their intraday lows. The S&P 500 briefly fell more than 1.5% in early trade before stabilising, leaving the index on track for a modest gain for the week despite heightened uncertainty. 

Technology stocks were a notable source of volatility, with Microsoft experiencing its sharpest single-day decline since the pandemic after softer than expected Azure growth and renewed concerns around the scale of AI-related capital expenditure. Meanwhile, gold highlighted the elevated cross-currents in markets, trading through an unusually wide intraday range of nearly 10% before settling slightly lower by session end. 

Commentary from Industry Leaders

This week I reviewed the 2026 outlook from J.P Morgan. Overall theme: Equities and growth remain supported but disciplined risk management will define success. 

Key Points: 

• Equities positive but differentiated: Early 2026 solid earnings and robust tech investment underpin returns, yet growth moderates later in the year. 

• AI continues to drive productivity: J.P Morgan highlights AI as a central theme, benefiting more than just big tech - supply chains, data centres and infrastructure also matter.

• Disciplined allocation matters: Transition from risk-on to balanced portfolios - incorporating income, diversification and risk controls. 

• Policy and macro impacts: Rate cuts could unfold if inflation eases, but policy uncertainty adds volatility. 

• Structural themes: Divergence between a resilient market and uneven economic sentiment - wealth/income disparities influence different asset classes. Stick to disciplined portfolio construction - selective exposure to growth with balanced risk management. 

Bottom Line: Growth opportunities remain particularly around AI but 2026 is expected to reward disciplined portfolio construction and diversified exposure rather than broad-based risk taking. 

Economic News 

President Donald Trump has confirmed that he will announce his choice for the next Federal Reserve Chair as soon as next week, bringing an end to months of speculation over who will succeed Jerome Powell when his term expires in May 2026. 

Key Points: 

• Replacement timeline: Trump said the announcement will come next week, with markets and policymakers keenly watching for the nominee as Powell prepares to step down. 

• Interest Rate Stance: Trump has repeatedly criticised the current interest rate setting, arguing rates should be significantly lower than the 3.50%-3.75% range maintained by the Fed and has made support for rate cuts a key criterion for his nominee. 

• Shortlist of candidates: The leading candidates include people aligned with Trump's preference for easier monetary policy, with name such as Rick Rieder, Kevin Warsh and Christopher Waller under consideration. 

• Political backdrop: The nomination comes amid heightened political pressure on the central bank including tensions over monetary policy direction and broader concerns about preserving Fed independence. 

Implications: Markets may interpret the eventual nominee's stance on interest rates and inflation control as a signal for future monetary policy, with potential impacts on equities, yields and risk assets broadly. 

Market Snapshot 

• Australia: ASX rises on health and energy. Gold miners fall. 

• United States: Dow 0.11%, S&P 500 -0.13%, Nasdaq -0.72%. 

• Bonds: US 10-year yield at 4.23% and Australian 10-year yield at 4.83%.  

• Gold: Declined overnight.

Key Events Coming Up

• Monday 2nd, February: RBA Fed Interest Rate Decision 

Investment Update

There is continuing investor interest in diversified private infrastructure strategies that target next generation infrastructure opportunities built around long-term structural trends. These approaches typically focus on acquiring and managing privately held infrastructure assets that are not widely available through public markets, offering an alternative to traditional listed infrastructure exposure and potentially reducing sensitivity to market volatility. 

Overall, infrastructure themes continue to attract allocations from investors seeking long-term growth and diversification beyond conventional market beta, especially in areas underpinned by robust demand and structural change. 

Some key elements of this thematic infrastructure approach:

• Diversified private exposure: Allocations span direct investments and secondary market positions in infrastructure assets, aiming to balance risk and return over the long term. 

• Operational resilience: Managers prioritise assets with established cash flows and the potential for operational improvement, enhancing downside protection through economic cycles. 

• Secular growth drivers: Investment themes often align with secular trends such as digital infrastructure build-outs, energy transition, electrification and logistics networks which can benefit from predictable demand and structural tailwinds. 

• Liquidity and alternatives: While incorporating some illiquid assets, these strategies may offer periodic liquidity features and serve as compliments to listed equities, helping diversify traditional portfolios.