Morning Wrap: ASX 200 flat, S&P 500 closes above 5,000 for first time + Audinate, Carsales results

ASX 200 futures are trading flat as of 8:20 am AEDT.

The S&P 500 closed above the key 5000 level for the first time, Nvidia shares rally another 3.6% (up 32% in the past month), oil prices are on a five-day win streak, leading US-listed BNPL company Affirm sold off on solid results and keep an eye out for first-half FY24 results from Audinate, Beach Energy and Car Group.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 higher and finished at best levels (Source: TradingView)

ASX TODAY

• ASX 200 futures point towards another flattish open

• Stocks due to report on Monday include: Audinate, Aurizon, Beach Energy, Car Group and JB Hi-Fi

• Breville consensus for 1H24 earnings include $944m revenue and $85.5m NPAT

• Seek consensus for 1H24 earnings include $615m revenue and $121.5m NPAT (cont ops)

• Boral smashed earnings expectations last Friday, analysts from Jarden and CSLA have mixed ratings but upgrade the share price to $5.80 and $6.40 respectively

• Liontown Resources rallied 10.4% last Friday after minimum bid requirements expired in regards to Rinehart's acquisition of a 19.9% stake (The Australian)

• Myer looking to sell Sass & Bide, Marcs and David Lawrence (AFR)

• Carlyle, Hibiscus Petroleum and Jadestone Energy are the final contenders to acquire Woodside’s Macedon oil and gas assets, valued at around $500m (The Australian)

MARKETS

• S&P 500 higher, finished at best levels and closed above the 5000 for the first time in history

• S&P 500 and Nasdaq both higher last week, up for a 14th week in the past 15

• Russell 2000 outperformed but remains a big year-to-date laggard

• Oil staging a comeback after logging a five-day win streak, up 5.9%

• Bullish focus points for the week – Resilient US growth backdrop with Atlanta Fed GDPNow estimate for 1Q24 at 3.4%, AI proliferation, restructuring and cost cutting announcements attracting a positive view for margins and renewed China bounce

• Bearish focus points for the week – Yields continue to grind higher, Fedspeak continues to tilt towards hawkish, market breadth concerns, regional banks under pressure and China deflation 

• S&P 500's forward PE ratio looking lofty, raising doubts over the market rally (Reuters)

• Historical trends suggest S&P could see double-digit returns (FT)

• Global buybacks rebounding amid improving profit growth (Bloomberg)

• Record cash piles at big tech firms paves way for capital return (Bloomberg)

EARNINGS

S&P 500 Q4 EPS growth currently sits at 2.9% compared to the 1.5% expected at the beginning of earnings season. Here are some aggregated numbers for the 67% of S&P 500 companies that have reported:

• 75% have beaten consensus EPS expectations, below the five-year average of 77%

• 65% have beaten consensus revenue expectations, below the five-year average of 68%

• Earnings beats are 3.8% above expectations, below the five-year average of 8.5%

• Revenue beats are 1.2% above expectations, below the five-year average of 2.0% 

CENTRAL BANKS

• Fed still set to cut rates this year despite strong labor market, immigration-led GDP tailwind (FT)

• ECB's Kazaks says hopes for cuts at one of the next two meetings might be too aggressive (Bloomberg)

• ECB's Villeroy says will likely lower interest rates in 2024 as the pace of price increases eases toward 2% by next year (Bloomberg)

• BoE's Haskel wants more evidence of waning inflation before voting for a cut (Reuters)

• RBA Governor Bullock not ruling out more hikes, but leaves door open to cut (Reuters)

GEOPOLITICS

• Biden eyes ban on Chinese smart cars, citing data security fears (Bloomberg)

• Biden seeks to crack down on Iranian crude without disrupting global markets (Bloomberg)

• US lawmakers urge commerce department to add Tiktok owner ByteDance to an export control list (Reuters)

CHINA

• China's real estate crisis starts to ripple across the world (Bloomberg)

• China equity flows turn positive but likely driven by state-backed offshore arms (FT)

• China unleashes loan flood to rescue sputtering economy, January sees record high borrowing (Reuters)

• PBOC says it will keep policy support flexible and precise (Reuters)

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Sectors to Watch

The overnight session was rather uneventful in terms of its impact on the ASX.

Buy now, pay later: The BNPL sector has been on a tear in recent months but the US-listed Affirm hit a wall last Friday. The company's quarterly reported topped revenue and earnings expectations though transaction costs were higher-than-expected. Analysts were cautious on the guidance (which was also a beat). The stock finished the session down 10.9%. Block also down 2.8%. Could this see some negative flow for names like Zip and Humm?

Tech: Tech was the best performing sector on Wall Street thanks to gains from Nvidia (+3.6%), Amazon (+2.7%) and Alphabet (+2.0%). Local names are starting to push out, including Wisetech (near 6-month high), Altium (near all-time highs) and Life360 (near 3-month high).

Resources: Pretty heavy session for resource-related ETFs, notably Uranium (-0.77%), Gold Miners (-1.2%) and Copper Miners (-1.2%). SPDR Energy and Materials also down -1.5% and -0.1% respectively.

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Why We're Far From a Bubble

"At this point, valuations at the top are no where near as frothy as they were at the height of the Dot Com Bubble. The 5 largest stocks traded at 43x Fwd PE in March ‘00, a 59% premium to the Mag 7’s current multiple of 27x," says Goldman Sachs.

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Happy Lunar New Year!

Carson Investment Group has grabbed the average annual S&P 500 return based on The Chinese Zodiac Signs. Dragons appear to have relatively average returns but higher 83.3% of the time! I'll try run the numbers for the ASX today.

Source: Carson Investment Research

ASX corporate actions occurring today:

• Trading ex-div: Bailador Technology Investments (BTI) – $0.035 

• Dividends paid: None

• Listing: None

Economic calendar (AEDT):

No major economic announcements.