Morning Wrap: ASX 200 to fall, S&P 500 logs worst day of the year + Lovisa, NextDC, Reece earnings

ASX 200 futures are down 64pts (-0.78%) as of 8:30 am AEDT.

In a nutshell:

• US stocks tumbled on weaker-than-expected flash PMIs data, with services falling into contraction for the first time in two years

• The weaker-than-expected PMIs drove commodity prices lower, and related-mining stocks down around 3-4%

• Another massive results day, so far Aussie Broadband has issued a special dividend and guidance upgrade, NextDC reports another sizeable loss, Reece flags a poor outlook ahead

Let's dive in.

S&P 500 SESSION CHART

S&P 500 trended lower to finish near worst levels (Source: TradingView)

OVERNIGHT MARKETS

• US benchmarks fell on Friday and finished near worst levels, with the S&P 500 logging its worst session of 2025

• Big risk off session sparked by growth concerns from softer-than-expected US and European flash PMIs 

• US weekly recap: Russell 2000 (-3.71%), Nasdaq (-2.51%), Dow (-2.51%), S&P 500 (-1.66%)

• Last week marked a rotation towards defensives and away from cyclicals and tech, with Mag-7 names logging sizeable declines including Meta (-7.2%), Amazon (-5.3%) and Tesla (-5.1%)

• Global equity funds continued to see robust inflows, with the majority directed to European equity funds (RT)

• Goldman Sachs flags possibility of market correction in near term due to weaker flows (BBG)

STOCKS

• Berkshire Hathaway's operating income surged 71% year-on-year in Q4 to $14.5bn, driven by insurance underwriting and insurance investment income (CNBC)

• Buffett says despite record $334B cash pile, Berkshire Hathaway's preference for equities will not change (CNBC)

• Meta reduces annual distribution of employee stock options by about 10%, affecting tens of thousands of workers (FT)

• Rivian projected lower EV deliveries but aims for profitability by cutting raw material costs (FT)

• Alibaba shares surge after pledge to invest 'aggressively' in AI (FT)

CENTRAL BANKS

• Fed Governor Kugler says still some way to go before achieving 2% inflation objective (BBG)

• Atlanta Fed's Bostic anticipates two further rate cuts in 2025 though outlook uncertain (BBG)

• Governor Ueda says BOJ ready to increase JGB buying to counter sharp rise in yields (BBG)

• RBA Governor Bullock reiterates board is cautious about prospects for further easing (BBG)

• PBOC ramps up short-term liquidity injection to ease funding tightness (BBG)

GEOPOLITICS & TRADE

• Trump administration offers Ukraine improved draft for minerals agreement after Zelensky spurned initial offer (AX)

• US refusing to back draft UN resolution supporting Ukraine's territorial integrity, objects to language critical of Russia (RT)

• Europe faces €250B annual defense spending surge to offset potential US withdrawal (FT)

• Beijing objects to Trump's use of fentanyl as pretext for increasing tariffs, Washington embassy says (BBG)

• Trump meeting with Apple CEO Cook at the White House as tariffs threaten iPhones (BBG)

• Trump considering tariffs on countries that levy digital services taxes against US companies; also considering tightening rules on Chinese investment in US (FT)

• Trump warned drugmakers that tariffs are coming and encouraged them to quickly shift overseas manufacturing to US (BBG)

• Japanese executives warn China's export controls on gallium threaten global electronics supply chains, impacting Tesla, Apple (FT)

ECONOMY

• US February PMIs fall to 50.4, a 17-month low and below consensus 53 as manufacturing strength was offset services falling into contraction for the first time in over two years (S&P)

• Eurozone PMIs show February activity stuck in a rut with very tepid growth (RT)

• UK retail sales surge in January, led by food spending (BBG)

• Japan core inflation rises to highest since mid-2023, keeping BOJ on tightening track (RT)

ASX TODAY

• Aussie Broadband 1H25 EBITDA up 7.5% to $217.6m, interim dividend of 1.2 cps plus 2.4 cps special dividend, upgrades FY EBITDA guidance to $133-138m from previous $125-135m (ABB)

• Lovisa 1H25 NPAT up 6.5% to $56.9m vs. $63m consensus (9.7% miss), interim dividend unch at 50 cps vs. Morgans expectations of 43 cps, total sales up 12.9% in first seven weeks of 2H25 (LOV)

• Media companies considered “good buying” at the moment, with names like oOh!Media, Nine and Southern Cross as potential private equity targets (The Aus)

• Michael Hill 1H25 revenue of $360.2m vs. $359m guidance, gross margin 61.3% vs. 61-65% guidance (MHJ)

• oOh!Media FY24 NPAT up 2.4% to $56.3m vs. $53.0m consensus (6.1% beat), final dividend unch at 5.3 cps vs. 4.9 cps ests (6.6% beat) (OML)

• NextDC 1H25 underlying EBITDA up 3% to $105.4m, contracted utilisation up 18% to $176MW, net loss of $42.7m reflecting growing debt position, reaffirms full-year guidance of $210-220m EBITDA (NXT)

• Perenti 1H25 NPATA up 4% to $82m vs. $92.3m consensus (11.5% miss),  reaffirms full-year guidance (PRN)

• Perseus Mining 1H25 NPAT up 22% to $201.1m, interim dividend doubled to 2.5 cps, reaffirms full-year guidance (PRU) 

• Reece 1H25 NPAT down 19% to $181m vs. $190.5m consensus (5% miss), Executive Director Alan Wilson to step down, expects soft trading conditions to continue (REH)

WHAT TO WATCH TODAY

• Block – Shares fell 5.8% on Friday after Q4 gross profit missed expectations and growth showed signs of slowing. NYSE-listed shares plunged 17.7% overnight, pointing to further downside ahead.

• Commodities – Very weak overnight session for commodities, with ETFs like Uranium, Copper, Nickel and Gold miners all down around 3-4%.

• Results – Another massive results day, with plenty still to come. Some of the more interesting ones so far include i) Lovisa 1H25 missed consensus but dividend ok and trading update pointing to some strong numbers; ii) oOh!Media numbers all tracking 2-6% ahead of consensus; iii) Aussie Broadband unclear how 1H25 tracking against consensus but special dividend and guidance upgrade sound very positive at face value and iv) Reece with a sizeable miss and poor guidance.

BROKER MOVES

A few post results tweaks for Accent, Austral, Healius and Jumbo. QBE Insurance reports a strong 1H25 (NPAT, GWP and guidance beat) so likely to receive more upgrades today. And gold stocks continue to be downgraded on valuation concerns.

• Accent Group downgraded to Hold from Outperform; target cut to $2.20 from $2.25 (CLSA)

• Austal downgraded to Neutral from Buy; but target up to $4.30 from $4.14 (CITI)

• Austal upgraded to Outperform from Neutral; target up to $5.10 from $2.50 (MQG) 

• Gold Road downgraded to Hold from Buy; target cut to $2.60 from $2.75 (JEF)

• Healius downgraded to Underweight from Neutral; target cut to $1.02 from $1.20 (JPM)

• IPH upgraded to Outperform from Hold; target up to $5.25 from $4.95 (CLSA)

• Jumbo Interactive upgraded to Outperform from Neutral; target up to $14.80 from $14.40 (MQG)

• Newmont downgraded to Neutral from Overweight; target cut to $71 from $75 (JPM)

• QBE Insurance upgraded to Buy from Hold; target up to $24.30 from $21 (JEF)

• Qube Holdings downgraded to Hold from Neutral; but target up to $4.40 from $4.15 (UBS)

• Ramelius Resources downgraded to Neutral from Outperform; target remains $2.60 (MQG)

Stocks trading ex-dividend: 

• Mon 24 Feb: BSP Financial Group (BFL) – $0.401, Hansen Technologies (HSN) – $0.05, Humm Group (HUM) – $0.013, Infomedia (IFM) – $0.022, Ryder Capital (RYD) – $0.045, Santos (STO) – $0.162, Step One Clothing (STP) – $0.044, Vicinity Centres (VCX) – $0.06

• 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, Fortescue (FMG) – $0.50, Hearts and Minds Investments (HM1) – $0.08, Maxiparts (MXI) – $0.030, Telstra Group (TLS) – $0.095, The Lottery Corporation (TLC) – $0.08

• Thu 27 Feb: Beach Energy (BPT) – $0.03, Ebos Group (EBO) – $0.454, Ignite (IGN) – $0.035, Pro Medicus (PME) – $0.25, Shape Australia Corporation (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, Corporate Travel Management (CTD) – $0.10, 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: None

• Listing: None

• Earnings: Abacus Group REIT (ABG), Adairs (ADH), Ampol (ALD), APA Group (APA), Aurelia Metals (AMI), Aussie Broadband (ABB), Carindale Property Trust REIT (CDP), Centuria Capital Group (CNI), Centuria Industrial REIT (CIP), DroneShield (DRO), EVT (EVT), Generation Development Group (GDG), GDI Property Group REIT (GDI), GenusPlus Group (GNP), GR Engineering Services (GNG), Immutep (IMM), Ingenia Communities Group REIT (INA), IPD Group (IPG), IRESS (IRE), IVE Group (IGL), Kogan.com (KGN), Liberty Financial Group (LFG), Lifestyle Communities (LIC), Lovisa (LOV), Mayne Pharma Group (MYX), Mesoblast (MSB), NIB Holdings (NHF), Nuix (NXL), Ooh!Media (OML), Paladin Energy (PDN), Perenti (PRN), Perseus Mining (PRU), Polynovo (PNV), Propel Funeral Partners (PFP), Reece (REH), Regis Healthcare (REG), Resolute Mining (RSG), RPMGlobal Holdings (RUL), SiteMinder (SDR), Stanmore Resources (SMR), Supply Network (SNL), Vault Minerals (VAU)

• AGMs: None

Economic calendar (AEDT):

No major economic announcements.