Morning Wrap: ASX 200 futures flat, S&P 500 hits record high + REA and Transurban earnings

The S&P 500 rallied to another all-time high and closed just shy of the 5000 level, the Russell 2000 underperformed and finished the session in red, Snapchat shares sold off more than 30% as earnings crumble, ASX earnings season ramps up with results from Transurban, REA Group and more.

Let's dive in.

S&P 500 SESSION CHART

S&P 500 gaps up and rallies intraday (Source: TradingView)

MARKETS

• ASX 200 set to open flat amid relatively uneventful overnight session for key sectors such as resources and banks

• Major earnings today include Transurban (EBITDA and dividend in-line, free cash flow beat), REA Group (revenue in-line, slight EBITDA beat) and Newscorp (slight revenue, EBITDA ahead of expectations)

• S&P 500 opened 0.38% higher and rallied intraday to close at best levels

• S&P 500 touched a brief high of 4,999, just shy of the symbolic 5,000 mark

• Small caps underperformed, with Russell 2000 finishing the session slightly lower

• No major directional drivers for the market. High-profile themes remained in focus including Fed pivot uncertainty, economic resilience, improvement in US earnings results and stretched positioning

• Uncertainty returns to Treasury market after Fed pivot and blockbuster US jobs data (Reuters)

• NYCB sells off again but broader regional bank space holding up (Bloomberg)

• Downturn in agriculture markets will see US farmers' income drop this year to lowest since 2006 (Bloomberg)

STOCKS

• Nvidia chip prices soar in Asia as US export curbs (FT)

• Moody's cuts NYCB's credit rating to junk, warns of further downgrade (FT)

• ESPN, Fox and Warner Bros Discovery plan to launch aggregated sports streaming service this year (FT)

• Tesla adds to growing focus around layoffs as managers were asked to assess how critical each employee position is (Bloomberg)

• Big oil firms return record amount to shareholders in 2023 (Reuters)

• GM to spend US$19bn over next decade to secure battery materials (CNBC)

EARNINGS

Roblox (+10.2%) – Double beat, quarterly revenues up 38% year-on-year, daily average active users up 20% to 70.2 million, better-than-expected net loss of $277.2 million, management said "top-line growth was particularly strong in Western Europe and East Asia ... We slowed spending growth across most of our major expense categories."

Alibaba (-5.9%) – Double miss, quarterly revenue up 5% year-on-year but net income down 77% year-on-year, board approved an increase of US$25bn to its share repurchase program through the end of March 2027, plans to cut staff by roughly 20,000.

Snap (-34.6%) – When doesn't Snap nosedive on earnings – Double miss, reported quarterly loss of US$248m, next quarter EBITDA view was below expectations.

CENTRAL BANKS

• Cleveland Fed's Mester open to rate cuts this year but not in a rush (FT)

• Fed Governor Kugler says the work on inflation is not done yet, rates need to hold steady for longer if disinflation slows (Fed)

• ECB's Schnabel says lower borrowing costs risk flare-up of inflation (FT)

• UK lawmakers criticise BoE's QT program (Bloomberg)

GEOPOLITICS

• Hamas proposes 135-day Gaza ceasefire pending Israeli withdrawal (Reuters)

• Trump weighing trade actions against EU if he returns, including tariff increases and countermeasures digital taxes (Bloomberg)

• Biden says bipartisan immigration bill is falling apart under political pressure from Trump (FT)

CHINA

• China replaces head of its securities regulator in a surprise move amid a sharp recent selloff in markets (Bloomberg)

ECONOMY

• Mexico has surpassed China as the top source of goods imported to US (AP)

Amcor – Why Watching ADRs Matter

Amcor (ASX: AMC) reported a relatively mixed Q2 result on Wednesday, before market open. Here are some of the key takeaways:

• EPS slightly exceeded expectations

• Core volumes fell 10% year-on-year, with both flexibles and rigid segments experiencing substantial drops

• Outlook remained cautious with expectations of mid-single-digit volume declines in Q3 and low-single-digit declines in Q4

• Analysts highlighted the company's focus on cost management to offset volume headwinds, achieving over $100 million in cost reductions in Q2

Amcor ADRs rallied around 5% in after hours, which implies a similar kind of gap up for local Amcor shares.

Instead, Amcor shares opened 0.3% lower and rallied 5.2% from the open to the 10:36 am AEDT high.

Amcor intraday chart (Source: TradingView)

ASX corporate actions occurring today:

• Trading ex-div: None

• Dividends paid: Incitec Pivot (IPL) – $0.257, Arena REIT (ARF) – $0.04 

• Listing: None

Economic calendar (AEDT):

• 12:30 pm: China Inflation (Jan)

• 12:30 pm: China Producer Price Index (Jan)