Morning Wrap: ASX 200 to fall, S&P 500 snaps 4-week losing streak + James Hardie's $14bn merger

In a nutshell: 

• Major US benchmarks clawed back into positive territory on Friday, and logged weekly gains for the first time in four weeks

• Despite a solid performance at the index level, breadth was incredibly weak

• James Hardie announces massive US$8.7bn acquisition of US building company AZEK

Let's dive in.

S&P 500 SESSION CHART

S&P 500 finished slightly higher, well off session lows (Source: TradingView)

OVERNIGHT MARKETS

• US benchmarks rallied back into positive territory after a wobbly start

• US weekly recap: Dow (+1.20%), Russell 2000 (+0.63%), S&P 500 (+0.51%), Nasdaq (+0.17%)

• S&P 500, Nasdaq and Russell 2000 all logged weekly gains, snapping four straight weeks of declines 

• Bullish focus points – Dovish Fed takeaways including Powell comments about transitory impact of tariffs on inflation, BofA CEO says consumer continues to spend strongly, no further Trump tariff bombs, reset in positioning and sentiment indicators, big tech back in M&A with Google’s $32bn bid for Wiz

• Bearish focus points – Stagflation fears after Fed’s SEP cut 2025 GDP growth forecast by 0.4pp to 1.7% and raised core PCE inflation forecast by 0.3pp to 2.8%, long list of underwhelming earnings from homebuilder Lennar, Accenture, FedEx and Nike, concerns about a pickup in negative pre-announced earnings into next reporting season and Trump’s retaliatory tariffs on Apr-2

• Dollar plunge magnifies stock market pain for foreign investors (FT)

• Chinese stocks slump as investors seek fresh catalysts post-rally (BBG)

STOCKS

• Nike beats on top and bottom line but warns of profitability impact from inventory reset, tariffs (BBG)

• Micron guides revenue above expectations amid strong demand for HBM chips (RT)

• FedEx downgrades guidance amid cost pressures, demand uncertainty and challenging macroeconomic conditions (BBG)

• Starbucks' big bet on reestablishing its cafes as community coffeehouses showing early signs of paying off (AX)

• CoreWeave IPO oversubscribed, offer could raise as much as US$2.7bn at top of marketed range (BBG)

CENTRAL BANKS

• BOC Governor Macklem says inflation risks from tariffs limit ability to support growth by cutting rates (BBG)

• RBA rate cut bets may be tempered by Australia's pre-election budget spending spree (BBG)

TRADE & GEOPOLITICS

• Trump signs executive order to boost production of critical minerals, tapping Defense Production Act to provide financing (Bloomberg)

• Trumps sign order to begin shutting Department of Education, but will need Congressional approval (WP)

• Trump's 2-Apr tariff announcement to be narrower than initially planned, excluding some nations and sectoral-specific tariffs (BBG)

• China may look to secure some relief from Trump tariffs by curbing exports of certain goods, including EVs and batteries, to US (WSJ)

• Foreign carmakers rushing to ship vehicles and key components to US to get ahead of next round of Trump tariffs (FT)

• China to host US Senator Daines for trade talks, first meeting with a top Communist Party official since Trump's return (BBG)

• China to add cobalt and copper to strategic reserves (FT)

• Germany's Bundesrat to vote on historic €500B spending package (RT)

• Japan and China to hold first economic dialogue in six years amid US trade tensions (BBG)

ECONOMY

• Japan’s core inflation hit 3.0% in February vs. 2.9% ests, a sign of broadening price pressures that reinforces expectations of further rate hikes (RT)

ASX TODAY

• Helia informed by CBA it has entered into exclusive negotiations with alternative provider for LMI services, CBA accounted for ~44% of GWPs in FY24 (HLI)

• James Hardie to acquire AZEK for $8.75bn in mixed consideration (JHX)

  • AZEK shareholders to receive $26.45 per share in cash and 1.034 ordinary JHX shares

  • JHX and AZEK shareholders to own 74% and 26% respectively of the post-transaction entity

  • JHX net sales and adjusted EBITDA to accelerate by 250 bps and 300 bps respectively over the next five years

  • ROIC in excess of JHX's cost of capital within medium term

  • JHX to executive up to $500m of share buybacks in the 12 months after the closing of the transaction

  • Subject to AZEK shareholder approval but anticipated to close in 2H25

• Lottery Corp CEO Sue van der Merwe to retire, effective end of 2025 (TLC)

• MinRes resumes Onslow haulage operations on 21-Mar, maintains FY25 Onslow iron volume guidance (MIN)

WHAT TO WATCH TODAY

• Benchmarks strong, breadth weak: Major US benchmarks largely ticked higher overnight but the S&P 500 logged one of its weakest breadth days of the year. The overnight ETF watchlist reflects this weakness, with most ETFs down 1-2%. Some of the key losers include Nickel (-2.5%), Copper Miners (-2.0%) and Steel (-2.0%).

• Supermarkets: Woolworths and Coles surged 5-6% on Friday after the ACCC's final supermarkets inquiry report cleared them of price gouging. The decision marked a major win for WOW, which had slumped 7.6% year-to-date and 12% over the past year, underperforming COL by the widest margin in five years. A Macquarie report, analysing three prior regulatory inquiries into banks, Qantas, and childcare, noted related stocks typically rallied 17% within 100 days post-inquiry.

BROKER MOVES

• McMillan Shakespeare upgraded to 'High conviction outperform' from Outperform; target is $19.70 (CLSA)

Stocks trading ex-dividend: 

• Mon 24 Mar: Lycopodium (LYL) – $0.10, Naos Emerging Opportunities Company (NCC) – $0.02, New Hope Corporation (NHC) – $0.19, NRW Holdings (NWH) – $0.07

• Tue 25 Mar: Adrad (AHL) – $0.014, Cash Converters International (CCV) – $0.01, Civmec (CVL) – $0.025, Mader Group (MAD) – $0.04, Southern Cross Electrical Engineering (SXE) – $0.025

• Wed 26 Mar: Flight Centre (FLT) – $0.11

• Thu 27 Mar: Australian Clinical Labs (ACL) – $0.035, Eagers Automotive (APE) – $0.50, Ipd Group (IPG) – $0.064, Maas Group (MGH) – $0.035, Salter Brothers Emerging Companies (SB2) – $0.02, Wiseway Group (WWG) – $0.004

• Fri 28 Mar: Bravura Solutions (BVS) – $0.105, Centuria Industrial REIT (CIP) – $0.041, Centuria Office REIT (COF) – $0.025, Charter Hall Long Wale REIT (CLW) – $0.063, Comms Group (CCG) – $0.001, Dexus Convenience Retail REIT (DXC) – $0.051, Dexus Industria REIT (DXI) – $0.041, Garda Property Group (GDF) – $0.018, Rural Funds Group (RFF) – $0.029

Other ASX corporate actions today: 

• Dividends paid: Aussie Broadband (ABB)

• Listing: None

• Earnings: None

• AGMs: None

Economic calendar (AEDT):

• 9:00 am: Australia Manufacturing and Services PMI Flash (MAR)

• 7:30 pm: Germany Manufacturing and Services PMI Flash (MAR)

• 8:30 pm: US Manufacturing and Services PMI Flash (MAR)