| Name | Daily Close | Daily Change | Daily Change (%) |
|---|---|---|---|
| Dow | 44,711.43 | 342.87 | 0.77% |
| S&P 500 | 6,115.07 | 63.1 | 1.04% |
| Nasdaq | 19,945.64 | 295.69 | 1.50% |
| VIX | 15.1 | -0.79 | -4.97% |
| Gold | 2,957.20 | 28.5 | 0.97% |
| Oil | 71.51 | 0.14 | 0.20% |
US MARKET
US stocks trimmed sharper losses from morning trading as markets continued to assess how the corporate sector may fare against an increase in long-dated Treasury yields. The S&P 500 and the Nasdaq were close to the flatline, while the Dow trimmed its 500 point plunge but remained firmly lower. This all came on the back of a hotter than expected January CPI print and the consequent revisions of the Fed’s interest rate settings over the foreseeable future. The S&P 500 was down 0.3%. The Nasdaq 100 up marginally 0.1%. The Dow Jones Industrial Average down 0.6%. The Russell 2000 down 0.8%.
More broadly, the yield on 10-year Treasuries jumped 10 basis point to 4.64%. The Dollar Spot Index was little changed. Gold was effectively unchanged at US$2,899 an ounce, marginally off from its Monday high of US$2,904.
Companies that make up 75% of the S&P 500 Index’s market capitalization have now reported 4Q results. Based on these results and guidance, EPS is now expected to increase 12.5% for the CY25 period compared with an anticipated 7.3% before the season kicked off, according to Bloomberg Intelligence. That’s well above an average 5.5% increase posted since the first quarter of 2022.
However, this has not translated into investors rewarding the performance. Stocks beating estimates have still underperformed the S&P 500 by an average of 0.1% on the day of reporting results — one of the worst reactions in four years. And companies falling short of expectations are being punished, with their shares trailing the benchmark by an average 3.2%.
While the S&P 500 is easily on track to double its earnings hurdles, a lower beat rate and sky-high investor expectations for the dominant Magnificent Seven has tripped up stocks as they hesitate around all-time highs.
AUSTRALIAN EQUITY MARKET WRAP
The S&P/ASX 200 Index closed up 51 points, or 0.61%, to 8535.3 (a record high) driven by December quarter results from Commonwealth Bank of Australia (CBA) and which also spurred gains in stablemates ANZ, National Australia Bank (NAB), and Westpac (WBC). It is worth noting that CBA’s credit impairment charge was just 7 basis points in the half-year to December, lower than expected, owing to rising house price and most critically strong employment, having clear positive sector wide implications. Distressed property listings are currently at its lowest level since 2022.
Seven of the 11 sectors finishing higher, led by industrials and financial sectors. The gain in industrials was led by sector heavyweight Computershare, after reporting strong half-year results. Interest rate sensitive sectors, notably technology, were underperformers on the day given higher T-bill yields overnight.
On the earnings results side, Computershare soared 15.5% to $41.53 after the company hiked its interim dividend 12.5% to 45¢ per share, on higher revenue growth and earnings improvement.
Suncorp rose 1.3% to $20.62 after the insurer’s net profit jumped to $1.1 billion in the first half, up from $582 million, due to a one-off gain from the sale of its bank.
Worth noting that the Australian ETF industry has topped the $250 billion in FUM, according to Betashares, with strong net inflows YTD. January inflows of $4.6 billion compared to $600 million in January the prior year. International equity and Australian equity ETFs are reporting the highest net flows, accounting for a combined $3.1 billion. Compare this ETF inflow dynamic with that of the managed funds industry – generational structural change is well and truly afoot.
Reporting results on Thursday are results expected from ASX, Domain Holdings, Downer EDI, IAG, HomeCo Daily Needs REIT, South32, Northern Star Resources, NRW Holdings, Pro Medicus, Origin Energy, Temple & Webster, Orora and Treasury Wine Estates.
The AUD/USD rate increased marginally by 0.01% to 0.6298.