Morning Wrap: ASX 200 to slip, Equal-weight S&P 500 hits all-time high as defensives rally

ASX 200 futures are down 15pts (-0.16%) as of 8:30 am AEDT.

In a nutshell:

• Major US benchmarks mostly lower, but closed off worst levels

• S&P 500 (-0.51%) and Nasdaq (-1.51%) dipped as much as 1.1% and 2.4% respectively in early trade

• Breadth was very strong as sectors like Energy, Materials, Real Estate and Health Care all gained more than 1%

• Strong breadth drove the Equal-weight S&P 500 (+0.87%) to a fresh all-time high

Let's dive in.

S&P 500 SESSION CHART

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

OVERNIGHT MARKETS

• Major US benchmarks mostly lower but off worst levels

• S&P 500 and Nasdaq down as much as 1.1% and 2.4% respectively, largely driven by continued weakness in Tech

• Breadth was notably strong, with the Equal-weight S&P 500 (+0.87%) outperforming the cap weighted benchmark by 138 bps and closing at all-time highs

• Defensives and cyclicals mostly rallied more than 1%, while Tech and Discretionary down more than 1%

• Brent edges higher after Axios reported Iran-US nuclear talks are breaking down amid Iranian demands to alter scope of negotiations (AX)

• Average analyst gold price forecast up to ~US$4,750 on global economic uncertainty, central bank buying (RT)

• Apple outperforms broader tech complex by most in a year, seen as safe harbor amid AI fears (BBG)

• AI disruption fears spark huge selloff in global software amid fresh concerns over business models and pricing power (BBG)

• Nvidia's CEO dismisses AI replacement fears after Tuesday's software stock rout (RT)

• Investors betting on steeper yield curve with Warsh expected to push for smaller Fed balance sheet (RT)

• US value stocks outperform growth amid tech slump, but historical patterns like dot-com bust raise concerns (BBG)

• Gold posts strongest daily gain in over 17 years on safe-haven demand amid renewed US-Iran tensions (BBG)

• Kospi's rebound to record high brings index out of discount territory, putting its valuation on par with Japan (NK)

• OPEC output down 230,000 bpd in January, a third of which tabbed to Venezuelan turmoil (BBG)

STOCKS

• AMD shares tumble 17% despite beat on data centre center strength (RT)

• Super Micro guides revenue above expectations amid strong AI server demand, shares rally 13% (BBG)

• Anthropic says its AI chatbot Claude will remain ad-free, diverging from OpenAI's move to test ads (CNBC)

• Novo Nordisk says it is under unprecedented pricing pressure after Trump Most Favored Nation agreement (FT)

• Uber profit outlook disappoints, outlines near-term AV strategy, shares tumble 5% to near one-year low (FT)

• Washington Post lays off a third of employees across all departments, shuttering some sections of the paper (NBC)

• Intel CEO announces plans to build GPUs targeting data centers (RT)

• Tesla's China shipments rose 9% in January, while BYD sales almost dipped 30% (BBG)

• Amgen beats Q4 expectations with strong flagship drug sales, but faces patent expiration challenges (BBG)

• Food and drink companies face challenges as US shopper sentiment plummets, prompting price cuts (FT )

• UBS plans $3bn share buyback in 2026 amid higher dividend and regulatory uncertainties in Switzerland (RT)

• Nintendo shares tumble 11% following earnings miss, concerns about margin compression from surging memory chip prices (BBG)

TARIFFS

• Nvidia H200 exports to China being held up US national security review, China customers withholding orders (FT)

• Trump and Xi hold first phone call since November, Trump says discussed trade, Iran and upcoming April meeting (TS)

• US-Mexico unveil 60-day plan to develop coordinated trade policies around critical minerals (YF)

• Trump's Project Vault lifts US government involvement in securing critical minerals, facing Chinese competition (WSJ)

• Rare earths customers rush for alternatives to China amid US-China trade tensions, says Adamas Intelligence (FT )

CENTRAL BANKS

• RBA's rate hike heralding beginning of tightening cycle (BBG)

• RBI expected to hold Friday, may buy dollars to rebuild FX reserves (BBG)

ECONOMY

• US January ISM Services PMI was 53.8 vs. 54.1 ests, still holding the fastest growth since 2024, new orders fell to 53.1 from 56.4 a month ago (BBG)

• Eurozone inflation falls its lowest since September 2024, as energy prices decline (BBG)

• New Zealand labour market remains weak with unemployment rate rising to highest since March 2015 (RNZ)

ASX TODAY

• Generation Development’s short interest jumps as investors eye escrow on shares held by Evidentia owners as part of Feb-25 acquisition (AFR)

• Neuren receives US FDA meeting feedback for NNZ-2591 clinical development in HIE and PTHS, FDA requested additional study data for HIE and encouraged a future meeting request to discuss appropriate endpoints (NEU)

• Shell seeking to sell minority stake in Woodside-operated North West Shelf Project (AFR)

WHAT TO WATCH TODAY

• Uranium, copper and lithium pullback: Pretty big pullback for these three sectors, with Uranium, Copper and Rare Earth/Strategic Metals ETFs down 6.9%, 4.5% and 3.4% respectively. Copper prices slipped 2.8% and back below US$6/lb, while Chinese lithium futures traded 1.3% higher on Wednesday to 147,220 yuan a tonne (prices have falling around 7% in the past week).

• Tech volatility: A few key US software names bounced overnight, notable Workday (+5.5%), Adobe (+2.8%), Intuit (+2.6%) and Salesforce (+1.5%). Though Uber (-5.1%) dipped on soft earnings, Shopify (-4.4%), Snowflake (-4.5%) and Hubspot (-0.5%) also lower. These stocks are brutally oversold, but analyst commentary mostly point to very low appetite for the sector, where better-than-expected earnings no longer matter. The market wants to see "irrefutable" evidence that AI is a tailwind to growth rather than a long-term headwind, according to JPMorgan.

BROKER MOVES

• Centuria Office REIT upgraded to Hold from Sell; target remains $1.05 (BP)

• Pinnacle Investment Management retained Buy; target lowered to $25.25 (MQG)

Stocks trading ex-dividend: 

• Thu 5 Feb: None

• Fri 6 Feb: None

Other ASX corporate actions today:       

• Dividends paid: Arena REIT (ARF)

• Earnings: Beach Energy (BPT)

• IPOs: None

• AGMs: None

Economic calendar (AEDT):

• 11:30 am: Australia Balance of Trade (Dec)

• 11:00 pm: Bank of England Rate Decision (Ests: Hold at 3.75%)

• 12:15 am: ECB Rate Decision (Ests: Hold at 2.15%)

• 2:00 am: US JOLTs Job Openings (Dec)