Hi, I’m Matt Wilkinson, Portfolio Manager at Morningstar Investment Management. Welcome to the Morningstar Market Minute.

The headline news this week is the January Consumer Price Index (CPI). Inflation remains uncomfortably high at 3.8% annually. This result slightly exceeded the market’s consensus forecast of 3.7%. However, the real focus for the RBA is underlying inflation. The trimmed mean CPI—ticked higher to 3.4%. This was stronger than the 3.3% expectation held by most major forecasters. Interest rate futures now reflect a very strong chance of rate rises in the coming months. Some analysts are now pricing in the cash rate reaching 4.1% by May. With core inflation refusing to enter the RBA’s 2–3% target range, the prospect of further tightening highly likely in the first half of 2026.

Turning to reporting season, two heavyweights of note dropped results this week:

  • Firstly, Woolworths (ASX:WOW), the result was a tale of two numbers. Statutory profit nearly halved due to a massive $710 million provision for historical underpayments. However, the market focused on the underlying profit, which jumped 16.4%, and the company announced and 15% increase to the dividend. Investors were clearly happy,  the stock surged 11% on the day.
  • Fortescue (ASX:FMG) is the other notable name. It delivered a standout 23% jump in underlying profit to US$1.9 billion, fueled by record iron ore shipments. Investors are happy here as well. The shares climbed nearly 4% after the board declared 24% increase in the dividend that beat analyst expectations. 

Globally, US trade policy took two dramatic turns this week. It started with the US Supreme Court striking down the use of emergency powers for certain tariffs, before President Trump promptly replaced them by a new 15% global tariff framework. While this adds transparency, they too are likely to be challenged.

And in US company news, Nvidia (NAS:NVDA) reported this week, and it delivered a record-breaking fourth-quarter result. Revenue skyrocketed 73% year-over-year to $68.1 billion, driven by an insatiable demand for AI infrastructure. With gross margins above 70%, net income increased a staggering 94% year on year. Most impressively, Nvidia issued very ambitious guidance for the next quarter, forecasting revenue of $78 billion, well above even the most bullish Wall Street estimates. As a result, shares rallied over 3.5% in after-hours trading, and it has quelled the fears of an AI bubble for now, confirming that the “agentic AI” era is translating into massive, tangible revenue growth.

This has coincided with the SAASpocalypse stalling in recent days, and finally software names catching a bid in global markets. At Morningstar, we continue to remain disciplined by staying diversified, looking in areas that are unloved and rebalancing into those when appropriate. That’s it for now. Thanks for watching, and we’ll see you next Friday.