Donald Trump’s mounting siege of Federal Reserve chair Jerome Powell will be closely watched by Australian fund managers, even as markets take the latest assault on the independence of the US central bank in their stride.

The US president’s attempts to pressure the Fed to cut interest rates prompted an unprecedented intervention by 12 international central bankers, including Reserve Bank of Australia governor Michele Bullock, who issued a statement in solidarity with Mr Powell and the Fed.

Former RBA veteran Jonathan Kearns, now chief economist at annuities giant Challenger, said it was a historically unusual move by the central bankers who tend to shy away from politics.

“The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve,” read the statement, which was also signed by Bank of England governor Andrew Bailey and the European Central Bank’s Christine Lagarde.

The subdued reaction of equities and bonds traders is unsurprising.

Other than the bond market meltdown following the liberation day tariff shock last April, markets have mostly brushed off developments out of the White House.

Ms Bullock has warned that low risk premiums, despite heightened geopolitical instability and the threat of tariffs, mean a worse outcome than expected could catch traders off guard and ultimately end in tears.

Dr Kearns doubted Mr Trump would pay much attention to the central bankers’ statement, but could be forced to rein in his attack if the bond market responds violently to the prospect of a politicised Fed resulting in higher-for-longer inflation.

“A lot of analysts believe that the risks are greater than seems to be being priced by the bond market,” he told AAP.

“If you were to see a larger reaction from the bond market, then maybe you do get some sort of pullback in the way that you did see after liberation day.”

JP Morgan chief executive Jamie Dimon, one of the most influential voices on Wall Street, said chipping away at Fed independence to lower rates would have the reverse consequence, by raising inflation expectations and interest rates over time.

Super funds have more than $600 billion tied up in US assets, according to IFM Investors and the Super Members Council, and have increasingly turned to the US to park their funds as they have outgrown the Australian market.

Dr Kearns said Australian fund managers should be changing the way they perceive the risks of US investments, given the risk of higher inflation.

But there’s also the risk of overreacting and missing out on the AI bonanza turbocharging US equities.

“What we’ve seen investors doing is saying, ‘well, I can’t completely reduce my exposure to the US, but I’m going to tweak it at the margin’,” he said.

“So we’ve heard statements from some of the super funds that say they’re redirecting a larger share of their flows to other markets, rather than the US, because of their assessment of the prospects and the risks.”

China’s trade surplus surged to a record of almost $US1.2 trillion ($A1.8 trillion) in 2025 as exports picked up in December.

Customs data shows that China’s global surplus rose 20 per cent from the previous year, with exports at $US3.77 trillion and imports at $US2.58 trillion. 

The 2024 trade surplus was $US992 billion.

China’s exports for December were up 6.6 per cent from the previous year, better than economists’ estimates and higher than November’s 5.9 per cent year-on-year increase. 

Imports in December were up 5.7 per cent year-on-year, compared to November’s 1.9 per cent.

Economists expect exports will continue to support China’s economy in 2026, despite trade friction and geopolitical tensions.

“We continue to expect exports to act as a big growth driver in 2026,” said Jacqueline Rong, chief China economist at BNP Paribas.

While China’s exports to the US have fallen sharply since President Donald Trump returned to office and escalated his trade war with the world’s second-largest economy, that decline has been largely offset by shipments to other markets in South America, Southeast Asia, Africa and Europe.

Strong exports have helped keep China’s economy growing at an annual rate close to its official target of about five per cent, but they have also triggered alarm in countries that fear a flood of cheap imports are damaging local industries. 

The head of the International Monetary Fund in December called for China to fix its economic imbalances and speed up its shift from reliance on exports by boosting domestic demand and investment. 

An exiled underworld boss linked to ongoing tobacco wars has been arrested following an independent criminal investigation by Middle Eastern authorities.

Kazem ‘Kaz’ Hamad was arrested for drug trafficking, according to a statement from Iraq’s National Centre for International Judicial Cooperation.

AFP Commissioner Krissy Barrett says the arrest marks a significant disruption to an alleged serious criminal and his illicit enterprise in Australia.

She says federal police have been working with domestic partners to dismantle the offender’s criminal network, including targeting the alleged offender offshore.

“AFP members have met with a number of agencies offshore about this alleged offender. And I have had one-on-one conversations with law enforcement principals about this alleged offender,” Ms Barrett said on Wednesday.

“Late last year, the AFP provided information to law enforcement officials in Iraq about this alleged offender. Iraqi officials have made an independent decision to arrest this alleged offender after launching their own criminal investigation.”

Hamad is believed to be the leader directing organised crime operations in Australia from the Middle East.

The syndicate is believed to be behind several high profile firebombings, as it fights for control over the importation and distribution of illegal tobacco in Victoria.

Police revealed in March that several tobacco store owners were intimidated with threats linked to a so-called “Kaz Tax”.

Detective Inspector Graham Banks described the incidents as extortion, saying some shop owners were so concerned for their safety that they sold their businesses and changed their addresses.

Police also suspect Hamad had been involved with the arson attack on the Adass Israel Synagogue in Melbourne in December 2024.

He was deported from Australia in 2023.

Iraq’s National Centre for International Judicial Cooperation said on Tuesday that Hamad was “one of the most dangerous wanted men in the world”.

“The accused individual … was arrested in co-ordination with the General Directorate of Narcotics and Psychotropic Substances Affairs at the Ministry of Interior, after obtaining the necessary approvals from the Supreme Judicial Council to conduct investigations against him,” the statement reads.

“The proceedings were initiated by the First Karkh Investigation Court, which specialises in drug cases.”

The statement says Hamad is allegedly responsible for importing large quantities of drugs into Iraq and Australia, as well as smuggling heroin.

“He is also involved with the most prominent organised crime gangs in Australia – Sydney, responsible for shootings, murders, kidnappings, violent assaults, extortion, and drug imports,” it says.

Iraqi authorities say they believe he is involved with outlaw gangs that have extensive influence within Australia and the Middle East.

“(They) are responsible for carrying out murders, shootings, money laundering, fraud, assaults, arson, and drug trafficking on a global level.”

Federal police thanked Iraqi authorities for their work, adding they would co-operate with key partners to help keep Australians safe.

Asian stocks rose on Wednesday, buoyed by Japanese shares, as investors braced for a snap election in Japan that could lead ‍to more fiscal stimulus, while worries about central bank independence and benign US inflation data whipsawed currencies.

Geopolitical tensions across the globe lifted gold to a record peak and sent oil prices ​higher as US President Donald Trump urged Iranians to keep protesting, saying help is on the way. Iran in turn accused Trump of encouraging political destabilisation and inciting violence.

The Japanese yen hit ⁠its weakest level since July 2024 at 159.415 per dollar in early Asian hours, as the threat of a market intervention resurfaced. Local media reported that Prime Minister Sanae Takaichi was considering calling a snap lower house election on February 8.

The frail yen and the prospect of more stimulus sent the Nikkei up more than 1.0 per cent to a record and pushed Japanese government bonds lower, a so-called “Takaichi trade” that appears to have been turbocharged this week as investors worry about the country’s fiscal health.

Masahiko Loo, senior fixed income strategist at State Street Investment ‌Management, said the ​market moves reflected expectations of fiscal easing, though they may be overstated given political constraints as Takaichi’s coalition would need the opposition’s support in the upper ‍house to pass legislation.

“Any sharp and decisive break beyond 161 level (for yen) could trigger renewed intervention to curb excessive volatility,” Loo said. “In that scenario, expectations for a Bank of Japan rate hike may shift forward to April, potentially serving as an inflection point for currency dynamics.”

MSCI’s broadest index of Asia-Pacific shares was up 0.2 per cent to hover just below a record peak reached on Tuesday. Overnight, US stocks ended lower, led by a drop in financial shares after comments from JPMorgan executives added to worries about Trump’s recent proposal for a cap on credit card rates.

Chinese ​stocks rose 0.7 per cent in early trade, just below a 10-year high that was hit on Tuesday. ‌European stock futures rose 0.1 per cent, pointing to a muted open.

Data on Tuesday showed moderate underlying inflation pressures last month in the US Economists said this suggested the pass-through of import tariffs to prices was slowing, keeping ​rate cuts on the table this year, although the broad expectation is for the Fed to stand pat this month.

Traders are pricing in at least two rate ‍cuts this year, with a move not expected until after Fed Chair Jerome Powell’s term ends in May.

Matt Simpson, a senior market analyst at StoneX, said US inflation is not slowing sufficiently to move the needle towards imminent rate cuts.

“With lack of enthusiasm for cuts from an economic perspective, the US dollar might enjoy a ​bit ​more of a bid before the tide reverts to bearish hands,” Simpson ​said.

The dollar index, which tracks the greenback’s performance against a basket of currencies including ​the yen and the euro, inched higher to 99.243 after rising 0.2 per cent in the previous session.

The dollar was knocked back at the start of the week as investors worried about Fed independence under Trump after the US Department of Justice threatened to indict Fed Chair Powell in connection with a building renovation project.

That led to a sharp rebuke from Powell and global central bank officials later issued a coordinated statement of support for him on Tuesday.

Steve Lawrence, chief investment officer of Balfour Capital Group, said markets appeared to view this episode as largely political rather than a substantive institutional threat.

“Powell’s characterisation of any threat of indictment as intimidation reinforces that interpretation, signalling institutional defence rather than escalation,” Lawrence said. “From a market perspective, this suggests existing guardrails around the Fed are ‍still seen as intact.”

In commodities, gold rose 0.6 per cent to $US4,613.93 ($A6,907.54) per ounce and silver surged more than 2.0 per cent, also climbing ​to a record high.

Australia’s largest steelmaker will return hundreds of millions of dollars to shareholders after fending off a $13 billion takeover offer.

BlueScope Steel investors will receive a total of $438 million under a special dividend payout of $1 per share, after rejecting the offer from the Stokes family-controlled SGH and bid partner Steel Dynamics of the US.

The cash payout will be funded from surplus cash generated from the sale of certain assets, including its 50 per cent interest in the Tata BlueScope joint venture providing coated steel products for the Indian market.

The Illawarra steelworks operator has also offloaded 33 hectares of land in West Dapto, near the facility on the NSW south coast, for $76 million, and is releasing about $200 million of working capital from “residual” projects in its property division.

“This dividend decision is part of BlueScope’s established capital management framework and is independent of any prior or potential future proposals for the company,” it said in a statement on Wednesday.

Last week, BlueScope rejected a $13.2 billion offer, which would have resulted in a breakup of the group with the Australian assets going to SGH and the US business going to Steel Dynamics.

SGH and its partner are yet to formally respond to the rejection of their offer, which amounted to $30 per share and which BlueScope said dramatically undervalued its assets.

Market analysts have suggested the would-be predators will need to increase their offer if they want to return to the table.

The SGH/Steel Dynamics offer was made on December 12, but only came to light on January 5, when it was also revealed Steel Dynamics had made three unsuccessful previous approaches to take control of BlueScope.

“This special dividend demonstrates BlueScope’s ability to generate and distribute returns to its shareholders,” CEO Mark Vassella said.

“With a clear line of sight to the completion of our current significant capital investment program, BlueScope is positioned to not only return to the robust cash generation it has been known for, but to strengthen it further with the enhanced earnings of the business.”

The special dividend is unfranked and will be paid on February 24, after BlueScope releases its first half results on February 16.

BlueScope shares closed at $29.84 on Tuesday, just below the predators’ offer price.

The Trump ‍administration has given the green light to China-bound sales of ​Nvidia’s second most powerful AI chips, putting in place a rule that ⁠will likely kickstart shipments of the H200 despite deep concerns among China hawks in Washington.

According to the regulations, the chips will be reviewed by a third party testing lab to confirm ‌their technical ​AI capabilities before they can be shipped to China, which ‍cannot receive more than 50 per cent of the total amount of chips sold to American customers.

Nvidia will need to certify there are enough H200s in the US while Chinese customers must demonstrate “sufficient security procedures” and ​cannot use the chips for ‌military purposes.

US President Donald Trump announced in December that he would allow the chip ​sales and collect a 25 per cent fee on such sales.

The decision drew ‍fire from China hawks across the US political spectrum over concerns the chips would supercharge Beijing’s military and erode US ​advantage ​in artificial intelligence.

Such ​concerns had prompted the Biden administration ​to bar sales of advanced AI chips to China.

But the Trump administration, led by White House AI czar David Sacks, argues that shipping advanced AI chips to China discourages Chinese competitors like Huawei from redoubling efforts to catch up with Nvidia’s and AMD’s most-advanced ‍chip designs.

Netflix is working on revised terms for Warner Bros Discovery and has discussed making its offer all cash ‍for the company’s studios and streaming businesses, Bloomberg News has reported, citing people familiar ​with the talks.

The changes are designed to expedite a sale, which will take months ⁠to close and has faced opposition both from politicians and rival bidder Paramount Skydance, according to the report.

Netflix declined to comment on Tuesday, while Warner Bros did not immediately respond to a Reuters request for comment.

Netflix’s $US82.7 billion ($A123.8 billion) deal initially consisted of cash ‌and stock for ​Warner Bros’ film and streaming assets, while Paramount offered $US108.4 billion ($A162.3 billion) in ‍cash for the whole company, including its cable TV business.

Still, Warner Bros has favoured Netflix’s deal despite amendments to Paramount’s bid, including a $US40 billion ($A60 billion) equity backing by Oracle co-founder Larry Ellison – father of Paramount CEO David Ellison.

Warner Bros’ board has argued that Paramount’s offer hinges ​on a significant amount of debt financing that ‌heightens the risk of closing and the offer “remains inadequate”.

Paramount and Netflix have been in a heated ​battle for Warner Bros, its prized film and television studios, and its extensive content ‍library.

Its lucrative entertainment franchises include Harry Potter, Game of Thrones, Friends and the DC Comics universe, as well as coveted classic films such as Casablanca and Citizen Kane.

The bidding war ​has ​become Hollywood’s most closely ​watched takeover battle, as studios confront a landscape ​increasingly dominated by streaming platforms and as theatrical revenue remains volatile.

Lawmakers on both sides of the political aisle have raised concerns about further consolidation in the media industry that could potentially lead to higher prices and less choice for consumers.

Paramount on Monday sued Warner Bros for more information on its deal with Netflix and said it planned ‍to nominate directors to Warner Bros’ board.

The US government has posted a $US145 billion ($A217 billion) budget deficit for December, up 67 per cent ​or $US58 billion ($A87 billion) from a year earlier due to record outlays that were inflated by calendar shifts in benefit payments and receipts, the Treasury Department ⁠says.

The report showed that revenue growth from President Donald Trump’s tariffs may have plateaued, as December net customs receipts totaled $US27.9 billion ($A41.8 billion), down from the low $US30 billion ($A45 billion) range in recent months but far above the $US6.8 billion ($A10.2 billion) recorded in December 2024.

Net customs receipts for the first three months of fiscal 2026, which started October 1, totaled $US90 billion ($A135 billion) compared to $US20.8 billion ($A31.1 billion) in the prior-year period.

The Trump administration ‌implemented some tariff-cutting trade deals ​in November, including 10 percentage-point reductions in duties on imports from China and South Korea. The Supreme Court ‍also could soon rule on legal challenges to Trump’s tariffs under an emergency sanctions law. A ruling against those duties would further cut customs receipts.

The Treasury said that after making adjustments to December budget results in both 2024 and 2025, the December deficit would have been $US112 billion ($A168 billion), a decrease of $US14 billion ($A21 billion) or 11 per cent from the December 2024 budget gap. 

Some $US32 billion ($A48 billion) in January 2026 benefit payments were shifted into December ​because the new year started on a weekend, while a net $US51 billion ($A76 billion) ‌in December 2024 benefits were shifted to other months. But the $US145 billion ($A217 billion) reported deficit was a record for the month, a Treasury official said.

Military spending in ​December reached $US98 billion ($A147 billion), up $US20 billion ($A30 billion) or 25 per cent from a year earlier, due in part to the resumption of payments delayed by ‍a government shutdown in October, the Treasury official said.

The deficit for the first three months of fiscal 2026, which started on October 1, 2025, totalled $US602 billion ($A901 billion), down $US109 billion ($A163 billion) or 15 per cent from the same period a year earlier amid ​record receipts ​and outlays. Fiscal year-to-date receipts totalled $US1.225 trillion ($A1.834 trillion), up $US142 billion ($A213 billion) or ​13 per cent from a year earlier and a record for the ​period, due in part to collection of tax payments delayed by last year’s California wildfires.

Outlays for the first three months of fiscal 2026 were also a record, reaching $US1.827 trillion ($A2.735) trillion, up $US33 billion ($A49 billion) or 2.0 per cent from the year-earlier period.

The year-to-date outlay growth was fuelled by increases in Social Security and healthcare programs, as well as US Treasury public debt interest, which grew $US46 billion ($A69 billion), or 15 per cent from a year earlier, to $US355 billion ($A531 billion).

The Treasury official said the interest cost increase was driven largely by the growth of the US debt load, adding that the weighted average interest rate ‍paid by the Treasury in December was 3.32 per cent, only slightly above the 3.28 per cent paid a ​year earlier. 

Australia’s future ambassador to the US will not have an easy gig managing a relationship with Donald Trump and then a change in president, an expert says, as leading contenders for the job emerge.

Prime Minister Anthony Albanese announced on Tuesday Kevin Rudd has resigned as Australia’s ambassador to the US and will finish up a year early at the end of March.

The former Labor prime minister was appointed in 2023 but faced concerns over his past scathing criticisms of Mr Trump.

United States Studies Centre research director Jared Mondschein said no one could deny Dr Rudd’s tenure was anything but successful, pointing to the low tariffs on Australia.

He said the next ambassador was going to have to match the “tireless work ethic” of previous appointments.

“You need to have an ambassador who is willing to work across a wide array of topics and with a wide array of folks, Democrats, Republicans, Congress, executive branch and more, to further Australia’s interest,” Mr Mondschein said.

“It’s by no means a simple task at all.”

Former Labor ministers Joel Fitzgibbon, who previously held the defence portfolio, and Stephen Conroy have been floated as potential replacements.

Government sources noted Mr Fitzgibbon’s previous experience and his ability to play golf, a fond pastime of the US president.

Noting increasing tensions in the Indo-Pacific, Mr Mondschein said the US-Australia alliance was ultimately “a lot bigger than any one president or any one ambassador”.

“You only have to look at … the breadth and depth of the US Australia relationship to see that,” he said.

Mr Albanese will announce an appointment at a later date, denying the relationship between Dr Rudd and the Trump administration had been fractured.

Departmental sources praised the retiring ambassador’s work ethic and contacts, noting before his tenure it had been harder to secure meetings with officials within the Trump administration.

Dr Rudd will take up the role of global president of the Asia Society think tank.

He will also lead the society’s Centre for China Analysis.

Three Reserve Bank interest rate cuts were widely credited with accelerating growth in property values last year, but historical data shows the most drastic price surges aren’t always due to falling borrowing costs.

The 8.6 per cent increase in home values last year was the 11th strongest calendar year of the past four decades, according to data compiled by analytics firm Cotality.

Of the top five years of growth out of the past 40, only the 24.5 per cent boom in 2021 occurred with interest rates below current levels.

The strongest year of growth, when values soared more than 31 per cent in 1988, interest rates were around 15 per cent.

“Sometimes home values surge when you least expect it,” said Cotality Research Director Tim Lawless.

“These standout years remind us that housing markets are influenced by more than just interest rates. Fiscal stimulus, credit availability, migration trends and economic shocks all play a role in shaping outcomes.”

Home prices have declined in only six years in that period.

The largest dip occurred in 2008, as the Global Financial Crisis rocked the housing market, but rapid loosening in monetary policy saw values rebound by more than 10 per cent the following year.

An imbalance between supply and demand is the primary driver of price growth, with the Housing Industry Association estimating Australia’s housing shortfall is close to two million.

An uptick in building approvals in November, driven by a sharp rise in apartment projects, should translate into higher levels of home building in 2026, said HIA Senior Economist Tom Devitt.

“After nearly a decade of under-building, the foundations are finally being laid for a broader housing recovery in 2026,” he said.

On the demand side, inbound migration levels are also gradually returning to pre-COVID levels.

Net overseas migration fell to 306,000 in the past financial year, down from a peak of 556,000 in the year to September 2023, and is projected to fall further in coming years.