Morning Wrap: ASX 200 to rise, S&P 500 higher + Newscorp, REA Group earnings

ASX 200 futures are up 59pts (+0.70%) as of 8:30 am AEDT.

In a nutshell:

• US stocks finished higher and at best levels amid a drop in bond yields and the US dollar

• Several high-profile companies missed earnings estimates and provided weak guidance, including AMD, Alphabet and Uber

• Newscorp, REA Group and Beach Energy have reported earnings this morning

Let's dive in.

S&P 500 SESSION CHART

S&P 500 opened lower but rallied into positive territory (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished higher, rallying from a weak start to finish at best levels

• Breadth was positive, with the Equal-weight S&P 500 outperforming by 10 bps amid strength in yield-sensitive sectors like Real Estate and Utilities

• US 10-year yield down 8 bps to the lowest level since 18-Dec

• Option traders positioning for Big Tech to keep climbing if stocks race higher in next few weeks (WSJ)

• Global investors turn even more cautious on China, regardless of trade wars (RT)

STOCKS

• AMD (-6.2%) reports profit beat, data centre sales nearly doubled in 2024 but missed expectations, outlook disappoints (CNBC)

• Alphabet (-7.0%) after flagging a ~5pp deceleration in Cloud revenue growth to 30% year-on-year, margin drag from 2025 depreciation expense acceleration, guided for $75bn in 2025 capex but Search and Youtube topped estimates (BBG)

• Uber (-7.5%) reported Q4 EPS of 23 cents vs. 50 cent estimates, guidance also a slight miss (CNBC)

• Snap (-8.5%) Q4 earnings beat estimates on growing advertising sales, expanding user base but outlook disappoints (BBG)

• Honda-Nissan merger talks reportedly called off after Nissan took issue with becoming subsidiary (RT)

• Workday announces it will cut nearly 2,000 employees as it pivots to profitability focus (BBG)

CENTRAL BANKS

• Fed's Jefferson says appropriate to be cautious with rates as long as economy and labor market remain strong (BBG)

TRADE WAR

• US Postal Service reverses its temporary suspension of parcels from China and Hong Kong, feeding importer confusion (RT)

• Trump says he is in no hurry to speak with Xi to defuse a trade war (RT)

• China raises key mineral export controls after US tariffs imposed (RT)

• EU considers targeting US tech giants in response to Trump's tariff threats (FT)

ECONOMY

• US ISM Services PMI cools to 52.8 compared to 54.0 consensus, new orders index fell to lowest since Jun-24 and poor weather conditions were highlighted by many respondents as impacting business levels and production (BBG)

• US trade deficit widens in December on record-high imports ahead of Trump inauguration (RT)

• China Caixin services PMI slipped to 51 from 52.2 in December, employment sub-index declined at fastest pace since Apr-24 (Reuters)

• Chinese consumers splurged on spending during the Lunar New Year holiday (BBG)

• UK service sector struggles at the start of the year, firms raising prices at fastest pace in a year (Bloomberg)

• Japan service PMI expands at fastest pace in four months (RT)

ASX TODAY

• Beach Energy reports 1H25 NPAT growth of 37% to $237m on higher production and LNG swap cargos, issues interim dividend of 3 cps and tightens guidance (BPT)

• Newscorp reports Q2 EPS of 33 cents vs. 31 cents consensus, EBITDA growth of 20% to $478m, management note "we are providing priceless content for Generative AI, and remain vigilant in our pursuit of degenerative AI (NWS)

• REA Group reports 1H25 NPAT growth of 26% to $314m vs. $310.9m consensus, interim dividend up 26% to $1.10, CEO Owen Wilson to retire in the second half (REA)

  • 1H25 performance: "Vendors remained confident during the half with sales volumes consistently higher than the prior year, demonstrating the depth of demand, while buyers benefitted from more choice and some moderation in price growth."

  • Outlook: "Strong employment, high immigration levels and expectations for interest rate cuts in the first half of 2025 continue to support buyer demand and vendor confidence to list."

  • New listings: "January National residential new Buy listings were up 3% YoY, with Sydney increasing by 5% and Melbourne declining by 2%."

WHAT TO WATCH TODAY

• Gold: Gold rallied hit a fifth straight session of all-time highs of US$2,882 overnight (but closed off best levels). This pushed the Gold Miners ETF (GDX) up 2.5% overnight to a three month high. The Aussie gold price faced some headwinds, up just 0.2% overnight t to US$4,551 amid a falling US dollar. This may temper the gains for local goldies.

BROKER MOVES

• BWP Trust upgraded to Neutral from Sell with $3.45 target (CITI)

• BWP Trust upgraded to Buy from Neutral; target up to $4.05 from $4.01 (UBS)

• Pilbara Minerals reinstated Neutral with $2.10 target (GS)

• Wesfarmers upgraded to Neutral from Sell; target up to $76 from $69 (UBS)

Stocks trading ex-dividend: 

• Thu 6 Feb: Midway (MWY) – 31.43%

• Fri 7 Feb: None

Other ASX corporate actions today: 

• Dividends paid: Arena REIT (ARF)

• Listing: None

• Earnings: Beach Energy (BPT), REA Group (REA)

• AGMs: None

Economic calendar (AEDT):

• 10:30 am: Australia Balance of Trade (Dec)

• 10:00 pm: UK Interest Rate Decision (Consensus: 25 bp cut)