There has been a flurry of potential deals to keep investors on their toes during the first week as the Australian share market finished the initial full trading week of 2026.
Mining giant Rio Tinto is in talks to pursue an all-scrip merger with Glencore to form the world’s biggest miner worth $300 billion and steelmaker BlueScope jumped 2% to $30 a share after it rejected a $30 a share takeover offer from SGH and Steel Dynamics.
All of that action belied a lack of overall movement in the market, with the ASX 200 closing down 3 points at 8717.80 points, meaning that the index ended the week down 0.1%.
Rio shares slump on possible Glencore deal
The proposed Rio Tinto (ASX: RIO) merger played a big part in the weakness, with its shares falling 6.3% to $143.06 after it confirmed the discussions with Glencore about an all-stock merger.
The other big miners did much better, with shares in BHP (ASX: BHP) up 0.8% to $47.72 while Fortescue shares (ASX: FMG) weakened slightly by 0.2% to $22.71.
Financials were the other big drag on the index with Macquarie Group shares (ASX: MQG) down 1.3% to $206.08, ANZ shares (ASX: ANZ) fell 0.6% to $35.45, Westpac shares (ASX: WBC) were down 0.3% to $37.87, National Australia Bank shares (ASX: NAB) 0.2% weaker at $41.02 and Commonwealth Bank shares (ASX: CBA) losing 0.1% to $153.22.
Energy powers ahead
It was a different story for the energy index which echoed the strong oil price gains after Brent crude added nearly 5% after a larger-than-expected US January inventory decline of 3.8 million barrels and continuing concerns over Venezuelan supply.
Woodside shares (ASX: WDS) added 2.8% to $23.59, Santos shares (ASX: STO) rose 3.5% to $6.15 and Beach Energy shares (ASX: BPT) gained 2.8% to $1.10.
Defence shares bounce
It was a great day for defence-related shares after US defence shares jumped after President Donald Trump signaled support for a 50% increase in the American military budget to $US1.5 trillion.
Locally DroneShield shares (ASX: DRO) jumped 4.4% to $4.02 and shipbuilder Austal (ASX: ASB) added 3.3% to $8.06.
Codan shares (ASX: CDA) also rose strongly by 16.9% to $36.89 after forecasting underlying net profit after tax for the December half would be up 52% from rising demand for metal-detection equipment.
Traders now seem convinced that steelmaker BlueScope (ASX: BSL) remains active after it increased by 2% to $30 with brokers spruiking new valuations of up to $36 a share after BlueScope directors rejected a $30 a share takeover bid from SGH and Steel Dynamics.
In another reaction to news, Woolworths shares (ASX: WOW) rose 1.8% to $30.08 after investors backed a move to introduce a $2 surcharge on Click & Collect and delivery orders placed on Sundays and public holidays from February to offset high costs.
The Week Ahead
The coming week remains light on market moving announcements but that shouldn’t matter given the rapid rate of changes in the world economic order.
Events in Venezuela and the possibility that US President Trump may continue to shake up the world with the possible takeover of Greenland is sure to keep speculation bubbling along and also suggests that the chances of further unexpected changes cannot be ruled out.
Locally, there are measures of household spending, job advertisements and consumer confidence figures to be released.
US inflation numbers and Chinese trade figures are also out but it is likely world events will have more influence on world markets than economic announcements.
