Morning Wrap: ASX 200 to fall, S&P 500 drifts higher + Brambles, Fortescue, Telstra earnings

ASX 200 futures are down 38pts (-0.45%) as of 8:30 am AEDT.

In a nutshell:

• S&P 500 logged another record high

• January Fed minutes reiterate their position to be patient, while Reserve Bank of New Zealand cuts rates by 50 bps

• Avalanche of earnings today – so far, no major surprises from resource stocks and earnings beats from Bega Cheese and Brambles

Let's dive in.

S&P 500 SESSION CHART

S&P 500 trended higher to mark a second straight record close (Source: TradingView)

OVERNIGHT MARKETS

• US equities mostly higher, with benchmarks closing near best levels

• Relatively quiet session as markets remain in waiting mode for more clarity around Trump tariffs, taxes, budget and geopolitics, as well as further signals for the Fed’s policy path

• Mainland China investors buy most Hong Kong stocks on Tuesday in four years (BBG)

• Foreign holdings of US Treasuries fall in December as both Japan and China cut positions (RT)

• China holdings of US Treasuries fell by $57bn to $759bn in 2024, lowest since 2009 (FT)

STOCKS

• Apple introduces new low-end smartphone called the iPhone 16e priced at $599 (BBG)

• Microsoft reveals first quantum computing chip for advanced data centers, also sent quantum stocks broadly higher (BBG)

• Chipotle to hire ~200,000 additional employees as it prepares for peak demand season (RT)

• BP considers selling its Castrol lubricants business, potentially valued at $10bn (BBG)

CENTRAL BANKS

• RBNZ cuts rates by 50 bp, sees scope for more rate cuts (BBG)

• ECB's Panetta says signs of weakness in Eurozone more persistent than expected (BBG)

• January FOMC minutes stick to cautious, data-dependent posture as it awaits further clarity on Trump policy impacts (FED)

GEOPOLITICS & TRADE

• US and Russia agree to hold more talks on Ukraine war, as Trump upends generations of US policy (RT)

• Hamas says ready to exchange its remaining Israeli hostages all at once for full IDF withdrawal of Gaza (BBG)

• Trump says tariffs on auto, chip, pharma imports of ~25%, urging companies to build factories in the US (BBG)

• One in five Americans say they are buying more items than usual primarily due to concerns over Trump's tariffs (RT)

ECONOMY

• China new home prices flat in January but existing home prices continued to fall, down 5% vs. 5.3% drop in the previous month(RT)

• UK inflation rises to 10-month high of 3% in January (BBG)

• Australian wage growth slows, supporting RBA's view (BBG)

ASX TODAY

Earnings avalanche today – the below will highlight some of the high-profile results and 'What to watch' will capture some of the notable beats/misses.

• Aristocrat Leisure 2.7m block trade crosses at $79 per share (AFR)

• Bega Cheese 1H25 underlying NPAT up 170% to $35.9m (22% beat vs. $29.3m consensus), interim dividend up 50% to 6 cps (vs. Morgan ests of 4.5 cps), reaffirms FY guidance (BGA)

• Brambles NPAT up 9% to $446m, interim dividend of 19 cents per share, upgraded FY25 free cash flow before dividends guidance to $850-950m vs. prior $750-850m (BXB)

• Domino's Pizza CFO Richard Coney to retire, appointed George Saoud (held CFO and CEO roles at Coles, Lendlease and Fantastic Furniture) as Group CFO (DMP)

• Fortescue 1H25 NPAT down 53% to $1.55bn, interim dividend down 54% to 50 cps, reaffirms FY25 production (FMG)

• Pilbara Minerals reports 1H25 underlying NPAT loss of $7m, in-line with guidance of $5-7m loss (PLS)

• Rio Tinto 1H25 underlying NPAT up 15% to $11.5bn or 5.8% ahead of consensus ($10.9bn), reiterates FY guidance (RIO)

• Telstra 1H25 EPS up 6% to 8.9 cents (vs. consensus 9.0 cents), interim dividend up 5.6% to 9.5 cents per share (vs. consensus 9.4 cents), announces on-market buyback of up to $750m (TLS)

• Transurban 1H25 operating EBITDA up 9.4% to $1.3bn, average daily traffic across portfolio up 2.4%, interim dividend of 32 cents per share (in-line) (TCL)

• Wesfarmers 1H25 NPAT up 2.9% to $1.46bn (in-line with consensus), interim dividend up 4.4% to 95 cps (vs. Morgans estimates of 94.6 cps) (WES)

  • For 2H25 to date, the retail divisions have continued to trade well

  • Bunnings and Officeworks maintained solid sales momentum, with sales growth broadly in line with 1H25

  • Kmart Group's sales growth was stronger compared to 1H25, supported by its unique Anko product offer

  • Domestic cost pressures likely to persist with higher labour, energy, supply chain costs, and weakness in the Australian dollar

  • Group earnings in FY26 to benefit from the wind down of Catch by the end of FY25

WHAT TO WATCH TODAY

• Banks – The Financials sector is down 4% week-to-date, largely driven by a string of poor earnings updates from NAB, Westpac and Bendigo Bank. All three banks flagged deteriorating net interest margins amid higher wholesale funding costs and competition for loans and deposits. NAB experienced its largest one-day drop since March 2020 while BEN experienced a 15% single day selloff on Monday. It will be interesting to see if banks experience a prolonged selloff given the recent run up

• Resource weakness – Several resource-related ETFs dipped overnight to hit 2-4 week lows, notably uranium (-2.9%) and copper miners (-3.0%)

• Bega Cheese – Sizeable 1H25 earnings and dividend beat, expects FY guidance to be towards upper end of guidance. The problem here is that BGA is up 37% in the past six months. Morgans was already expecting a beat and possibly guidance upgrade. Nevertheless, still a strong, above consensus result

• Brambles – Is in a similar situation, delivering largely in-line NPAT, slightly higher-than-expected dividend and FY25 FCF upgrade. But BXB shares have rallied 24% in the last twelve months

BROKER MOVES

• Cleanaway downgraded to Hold from Buy; target cut to $3.00 from $3.30 (BP)

• Corporate Travel Management upgraded to Add from Hold; target up to $18.72 from $13.50 (MORG)

• Data#3 upgraded to Overweight from Market-weight; target up to $9.75 from $9.23 (WIL)

• Genesis Minerals downgraded to Neutral from Outperform; target remains $3.30 (MQG)

• Light & Wonder upgraded to Buy from Neutral; target up to $200 from $156 (CITI)

• NAB downgraded to Underperform from Neutral; target cut to $33.50 from $38 (BofA)

Stocks trading ex-dividend: 

• Thu 20 Feb: JB Hi-Fi (JBH) – $1.70, Teaminvest Private Group (TIP) – $0.015

• Fri 21 Feb: Amotiv (AOV) – $0.185, ASX (ASX) – $1.112, Bluescope Steel (BSL) – $0.30, GWA Group (GWA) – $0.075, Lendlease (LLC) – $0.06

Other ASX corporate actions today: 

• Dividends paid: Dexus Industria (DXI), Dexus Convenience Retail REIT (DXC)

• Listing: None

• Earnings: 29Metals (29M), Actinogen Medical (ACW), Austal (ASB), Aurelia Metals (AMI), Autosports Group (ASG), Beacon Lighting Group (BLX), Bega Cheese (BGA), Brambles (BXB), Cash Converters International (CCV), Charter Hall Group REIT (CHC), Chrysos Corporation (C79), Cogstate (CGS), Commonwealth Bank (CBA), Coronado Global Resources (CRN), CTI Logistics (CLX), Duratec (DUR), EQT Holdings (EQT), Fortescue (FMG), GenusPlus Group (GNP), Growthpoint Properties Australia REIT (GOZ), Healius (HLS), Hipages Group (HPG), IGO (IGO), Immutep (IMM), Insignia Financial (IFL), IPH (IPH), Joyce Corporation (JYC), MA Financial Group (MAF), MAAS Group Holdings (MGH), Magellan Financial Group (MFG), Mayne Pharma Group (MYX), Megaport (MP1), Mesoblast (MSB), Monash IVF Group (MVF), Nanasonics (NAN), Netwealth Group (NWL), Paladin Energy (PDN), Pilbara Minerals (PLS), PWR Holdings (PWH), Qube Holdings (QUB), Redox (RDX), Regis Resources (RRL), Ridley Corporation (RIC), Sandfire Resources (SFR), Silex Systems (SLX), Sonic Healthcare (SHL), Super Retail Group (SUL), Tabcorp Holdings (TAH), Telix Pharmaceuticals (TLX), Telstra Group (TLS), The Reject Shop (TRS), The Star Entertainment Group (SGR), Transurban Group (TCL), Universal Store Holdings (UNI), Veem (VEE), Wesfarmers (WES), Whitehaven Coal (WHC), Yancoal Australia (YAL)

• AGMs: Aristocrat Leisure (ALL) 

Economic calendar (AEDT):

• 6:00 am: FOMC Minutes

• 11:30 am: Australia Unemployment Rate (Jan)