Morning Wrap: ASX 200 to fall, S&P 500 extends pullback + AUB, Johns Lyng and Domino's Pizza earnings

ASX 200 futures are down 51pts (-0.61%) as of 8:30 am AEDT.

In a nutshell:

• US stocks continued to extend last Friday's weakness, which was largely driven by a slowdown in US and European manufacturing and services data

• Microsoft has begun cancelling leases on data centre capacity, while Apple says its ramping up AI investment to over US$500 billion in the next four years

• 1H25 earnings from names including AUB Group, Domino's Pizza, John Lyng, Woodside and more

Let's dive in.

Overnight Summary

Tue 25 Feb 25, 8:30am (AEST)

Name	Value	% Chg
Major Indices
S&P 500	5,983	-0.50%
Dow Jones	43,461	+0.08%
NASDAQ Comp	19,287	-1.21%
Russell 2000	2,188	-0.32%
Country Indices
Canada	25,151	+0.02%
China	3,373	-0.18%
Germany	22,426	+0.62%
Hong Kong	23,342	-0.58%
India	74,454	-1.14%
Japan	38,777	+0.26%
United Kingdom	8,659	-0.00%

Name	Value	% Chg
Commodities (USD)
Gold	2,966.0	+0.43%
Iron Ore	107.13	0.00%
Copper	4.511	-1.07%
WTI Oil	70.87	+0.67%
Currency
AUD/USD	0.6347	-0.16%
Cryptocurrency
Bitcoin (USD)	93,977	-1.88%
Ethereum (AUD)	4,165	-5.77%
Miscellaneous
US 10 Yr T-bond	4.393	-0.61%
VIX	18.51	+1.65%

S&P 500 SESSION CHART

S&P 500 lower, finished off worst levels (Source: TradingView)

OVERNIGHT MARKETS

• US equities mostly lower and finished near worst levels, the weakness followed last Friday’s selloff which saw the S&P 500 post its biggest decline of the year

• Tech stocks led to the downside, notably Nvidia (-3.0%), Meta (2-2%) and Tesla (-2.1%)

• Equal-weight S&P 500 outperformed the official benchmark by 58 bps, signalling a shift into defensive and value pockets of the market like Healthcare, Financials and Real Estate

• Not much newsflow overnight, though Trump said he expects tariffs on Mexico and Canada to take effect on March 4

• Negative guidance revisions have surged for both Q1 and 2025, Jefferies says full-year guidance changes have been the most negative in the history of its data (which goes back over ten years)

• S&P 500 selloff poses fresh test for the dip-buying habit among investors (BBG)

• Covid-linked stocks surge in Asia on new bat virus discovery (BBG)

• Physically backed gold ETFs registered the largest weekly inflow since March 2022 last week (RT)

STOCKS

• Microsoft has begun cancelling leases for a substantial amount of data centre capacity in the US, potential oversupply position (BBG)

• Starbucks planning to lay off 1,100 corporate-level workers (CNBC)

• Apple says it will hire ~20,000 new workers and boost AI investment to over US$500bn in US amid Trump tariff threats (BBG)

• JP Morgan deploying another $50bn as it vies for share in growing private credit market (RT)

• BP says it will abandon green renewable targets and return focus back to fossil fuels (RT)

• Berkshire Hathaway looks to raise ownership in Japan's five largest trading houses (BBG)

CENTRAL BANKS

• Chicago Fed's Goolsbee downplays last week's report showing increase in consumers' expectations for future inflation (BBG)

• ECB's Wunsch cautioned that central bank risks enacting too many rate cuts, should pause soon (FT)

GEOPOLITICS & TRADE

• US officials see prospect of Ukraine minerals deal but sticking points remain; Zelensky wants better terms (BBG)

• Trump administration took aim at China with a series of moves involving investment, trade and other issues (BBG)

• Trump administration urges Mexico to levy tariffs on Chinese goods (BBG)

ECONOMY

No major economic announcements.

ASX TODAY

• AUB 1H25 underlying NPAT up 9% to $79.3m, in-line with market expectations, interim dividend up 25% to 25 cps (vs. 23 cps ests or 8.7% beat), reaffirmed FY25 guidance (AUB)

• Deep Yellow guides production timelines, with maiden Tumas production in 2H26 and Muga Rock in 2028 (DYL)

• Domino’s 1H25 underlying NPAT down 5.7% to $58.8m vs. $57.6m consensus (2.3% beat), interim dividend unch at 55 cps, sales momentum improved through first-half and into the second (DMP)

• Fenix Resources reiterates production rate on track to triple to 4Mtper annum in 2025 (FEX)

• G8 Education CY24 NPAT up 14.2% to $72.4m and final dividend of 3.5 cps, largely in-line with consensus expectations (GEM) 

• Johns Lyng Group 1H25 NPAT of $22.6m vs. $27m consensus (16% miss), interim dividend of 2.5 cps vs. Morgans estimates of 4.2 cps, FY revenue and EBITDA guidance 5-6% below consensus (JLG)

• Lifestyle Communities 1H25 NPAT up 9.1% to $22.7m vs. $21.4m consensus (6.1% beat), no dividend due to recent slow sales and lack of forward visibility (LIC)

• Magellan Executive Chairman Andrew Formica discloses purchase of ~11,000 shares (MFG)

• Praemium 1H25 statutory up 45% to $5.8m vs. $7.4m consensus or 21% miss, CFO David Coluter resigns (PPS)

• Qualitas 1H25 normalised NPAT up 28% to $16.2m, year-to-date pipeline and closed transactions up 12% YoY to $3.8bn, reaffirms full-year guidance (QAL)

WHAT TO WATCH TODAY

A relatively weak overnight lead into another heavy day of results. The ones that stand out at the moment include:

• AUB – In-line earnings and above consensus dividend. The stock has traded relatively weak vs. peers

• Johns Lyng – A clean sweep of weaker-than-expected numbers for both 1H25 NPAT and dividend, plus full-year guidance. The stock sold off ~25% last reporting season on a poor set of results, this has reset its PE ratio to around 22 vs. 40 a year ago. Short interest has also surged in the past year from around 2% to 8.8%. So while the numbers are weak, there may be an argument for a bounce on valuation/short covering grounds

• Praemium – A sizeable statutory miss (unclear if due to one-off items) and CFO resignation

BROKER MOVES

Lots of brokers upgrading stocks on valuation grounds but they all missed earnings expectations yesterday (e.g. Iress, Reece and Wisetech).

• Aussie Broadband upgraded to Overweight from Market-weight; target up to $5.08 from $3.62 (WIL)

• Ampol upgraded to Outperform from Neutral but target cut to $29.45 from $30.65 (MQG)

• APA Group upgraded to Buy from Hold; target up to $8.44 from $8.35 (JEF)

• Goodman Group upgraded to Overweight from Neutral but target cut to $38 from $40 (GMG)

• IRESS upgraded to Overweight from Neutral but target cut to $9 from $10 (JPM)

• IRESS upgraded to Outperform from Neutral but target cut to $8.42 from $10.25 (MQG)

• Lindsay Australia downgraded to Hold from Add; target cut to $0.80 from $1.15 (MORG)

• Lovisa upgraded to Hold from Underperform; target up to $28.80 from $23.50 (CLSA)

• NIB Holdings upgraded to Overweight from Neutral; target up to $7 from $6.70 (JARD)

• Perenti upgraded to Buy from Hold; target up to $1.40 from $1.30 (JEF)

• Reece upgraded to Hold from Reduce but target cut to $18.70 from $19.95 (MORG)

• WiseTech upgraded to Buy from Hold but target cut to $115.30 from $132.20 (JEF)

Key events

Stocks trading ex-dividend: 

• Tue 25 Feb: AGL Energy (AGL) – $0.23, Amcor (AMC) – $0.204, Bailador Technology Investments (BTI) – $0.037, Bega Cheese (BGA) – $0.06, Challenger (CGF) – $0.145, Deterra Royalties (DRR) – $0.09, HMC Capital (HMC) – $0.06, IPH (IPH) – $0.17, MA Financial Group (MAF) – $0.14, Magellan Financial Group (MFG) – $0.264, Tabcorp (TAH) – $0.01, Wesfarmers (WES) – $0.95

• Wed 26 Feb: Bendigo and Adelaide Bank (BEN) – $0.30, Downer EDI (DOW) – $0.108, ECP Emerging Growth (ECP) – $0.024, Fortescue (FMG) – $0.50, Gold Road Resources (GOR) – $0.015, Hearts and Minds Investments (HM1) – $0.08, Maxiparts (MXI) – $0.030, Peter Warren Automotive (PWR) – $0.016, Telstra (TLS) – $0.095, The Lottery Corporation (TLC) – $0.08

• Thu 27 Feb: Beach Energy (BPT) – $0.03, Ebos Group (EBO) – $0.454, Gryphon Capital Income Trust (GCI) – $0.013, Ignite (IGN) – $0.035, Jumbo Interactive (JIN) – $0.24, KKR Credit Income Fund (KKC) – $0.017, Pro Medicus (PME) – $0.25, Shape Australia (SHA) – $0.10, Ventia Services Group (VNT) – $0.106, Whitehaven Coal (WHC) – $0.09

• Fri 28 Feb: AMP (AMP) – $0.01, Australian United Investment Company (AUI) – $0.17, Codan (CDA) – $0.125, Corporate Travel Management (CTD) – $0.10, Diversified United Investment (DUI) – $0.07, Fiducian Group (FID) – $0.219, Orora (ORA) – $0.05, Pengana International Equities (PIA) – $0.014, Prime Financial Group (PFG) – $0.008

Other ASX corporate actions today: 

• Dividends paid: Goodman Group (GMG), and Transurban Group (TCL)

• Listing: None

• Earnings: Ainsworth Game Technology (AGI), Amplitude Energy (AEL), AUB Group (AUB), AVJennings (AVJ), Dalrymple Bay Infrastructure (DBI), Domino's Pizza Enterprises (DMP), Energy Resources of Australia (ERA), G8 Education (GEM), Helia Group (HLI), Helloworld Travel (HLO), Johns Lyng Group (JLG), Mader Group (MAD), Nine Entertainment Co. (NEC), Pacific Current Group (PAC), Platinum Asset Management (PTM), Praemium (PPS), Qualitas (QAL), Qoria (QOR), Resimac Group (RMC), Sims (SGM), Solvar (SVR), Viva Energy Group (VEA), Wagners Holding Company (WGN), Woodside Energy Group (WDS), Zip Co (ZIP)

• AGMs: None

Economic calendar (AEDT):

No major economic announcements.