Morning Wrap: ASX 200 to fall, S&P 500 flat + A2 Milk, Aurizon, Lendlease earnings

ASX 200 futures are down 52pts (-0.61%) as of 8:30 am AEDT.

In a nutshell:

• US market mixed, with tech strength offset by weakness in staples, healthcare

• Several commodities pulled back sharply, including gold and copper

• A2 Milk reports a bumper 1H25, upgrades full year revenue guidance

Let's dive in.

S&P 500 SESSION CHART

S&P 500 closes breakeven amid choppy trade (Source: TradingView)

OVERNIGHT MARKETS

• US benchmarks finished mixed, traded within a narrow range

• US weekly recap – Nasdaq (+2.58%), S&P 500 (+1.47%), Dow (+0.55%), Russell 2000 (+0.1%)

• Relatively uneventful session, market drivers remain the push back of rate cut expectations to the second half of the year, Ukraine ceasefire hopes, GOP legislative progress, upbeat earnings takeaways and yield pullback

• US 10-year yield down 5 bps, and 15 bps in the last two sessions

• Q4 earnings season has been strong, but guidance trends have underwhelmed with expected 2025 growth slipping to 10% from 13% in early January (BBG)

• Trump's tariff threats as a negotiating tactic undermine popular dollar betting (BBG)

• AI hype supercharges Chinese stocks to three-year high (BBG)

• China saw record outflows of foreign direct investment last year of around $168bn (BBG)

STOCKS

• Airbnb (+14.4%) beats Q4 earnings expectations, management cite healthy demand in Asia, especially from Chinese consumers visiting destinations in Southeast Asia (RT)

• Applied Materials (-8.1%) forecasts Q2 revenues below estimates, stricter China rules an overhang (BBG)

• Apple to add Apple Intelligence to Vision Pro as soon as April (BBG)

• Apple to introduce AI features on China iPhones by mid-year (BBG)

TRUMP

• Trump signs memo on reciprocal tariffs, though plan unlikely to be implemented until April (BBG)

• House Budget Committee passes budget resolution involving US$4.5tn in tax cuts over a decade, an order for other committees to cut US$1.5tn in federal spending, a US$tn increase in debt ceiling and US$300bn in additional border-security spending (PC)

• Trump and India PM Modi discuss Indian purchases of US energy and lay groundwork for bilateral trade deal (BBG)

• Trump says Ukraine will be involved in any peace talks, wants Russia back in G7 (RT)

• VP JD Vance says US may impose sanctions, military action on Russia if peace deal not reached (RT)

• Zelensky says draft minerals deal with US does not contain security provisions needed by Ukraine, would also give US ownership of 50% of Ukraine's critical minerals (RT)

ECONOMY

• US retail sales drops by most in two years, January headline sales down 0.9% MoM vs. expectations for a 0.1% decline, marks first monthly decline since Aug-24, key areas of weakness include sporting goods (-4.6%), motor vehicles and parts (-2.8%) and online stores (-1.9%) (BBG)

ASX TODAY

• A2 Milk 1H25 NPAT up 7.6% to $91.7m, declares interim dividend of 8.5 cents per share (67% payout ratio), upgrades full-year revenue guidance to low-to-mid double digits from mid-to-high single digit percentage growth (A2M)

• Bluescope Steel 1H25 reported NPAT down 31% to $179m, interim dividend of 30 cents per share (BSL)

• Insurance companies at risk after opposition leader Peter Dutton threatens intervention (AFR)

• GPT Group full-year FFO down 3.6% to $470m, full-year dividend down 4% to 24 cents per share (GPT)

• Sigma Healthcare holder Jack Gance discloses 13.7% stake (SIG)

• Perpetual to receive a bid from KKR at more than $8 per share (AFR)

• Smart Parking to launch capital raising to fund acquisition of US-based Peak Parking for $36m, expected to be ~25% EPS accretive this financial year (AFR)

• Tyro Payments open to potential takeover proposals, Macquarie highlighted as a potential suitor (AFR)

• Westpac 1Q25 NPAT of $1.7bn (down 9% vs 2H24 quarter average), core net interest margin down 2 bp on 2H24 to 1.81% (WBC)

WHAT TO WATCH TODAY

• Commodity weakness –

• A2 Milk – 1H25 numbers were slightly ahead of consensus expectations, as a miss from ANZ was offset by strong China sales. The 8.5 cps interim dividend well-above Morgans’ estimates of 6.9 cps. Full-year revenue upgrade a cherry on top. NZX-listed A2 Milk shares opened 10% higher

BROKER MOVES

Lots of brokers getting behind Cochlear, despite the company reporting a 2.2% 1H25 NPAT miss and downgrading its full-year NPAT guidance to the lower end of $410-430m guidance.

• Cochlear upgraded to Neutral from Underperform; target remains $270 (BofA)

• Cochlear upgraded to Buy from Hold; target up to $308 from $305 (JEF)

• Cochlear upgraded to Overweight from Neutral; target up to $311 from $300 (JPM)

• Cochlear downgraded to Sector perform from Outperform; target cut to $312 from $340 (RBC)

• Cochlear upgraded to Neutral from Sell; target up to $285 from $270 (UBS)

• James Hardie downgraded to Equal-weight from Overweight; target cut to $55 from $60 (MS)

• Orora downgraded to Overweight from Buy; target cut to $2.40 from $2.60 (JARD)

Stocks trading ex-dividend: 

• Mon 17 Feb: None

• Tue 18 Feb: Computershare (CPU) – $0.45, Insurance Australia (IAG) – $0.12, Sandon Capital Investments (SNC) – $0.014

• Wed 19 Feb: Commonwealth Bank of Australia (CBA) – $2.25, Domain Holdings (DHG) – $0.02

• 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

Other ASX corporate actions today: 

• Dividends paid: None

• Listing: None

• Earnings: A2 Milk (A2M), Adore Beauty (ABY), Audinate (AD8), Aurizon (AZJ), Bendigo Bank (BEN), Bluescope Steel (BSL), Centuria Industrial (CIP), Centuria Capital (CNI), EVT (EVT), GPT Group (GPT), GWA Group (GWA), Lendlease (LLC), Navigator Global (NGI), NRW Holdings (NWH)

• AGMs: None

Economic calendar (AEDT):

• 9:50 am: Japan Q4 GDP Growth