The ASX is expected to fall today with the ASX 200 futures down 0.8% to 8,203 points, continuing last week’s losses.
The ASX200 closed 259 points lower last week, down 3.03% to 8,296, as earnings season took a sharp downturn.
Weak financial results from Westpac Group Ltd, National Australia Bank Ltd (OTC:NABZY) and Bendigo Bank Ltd weighed heavily on market sentiment, contributing significantly to the decline.
Additionally, sharp share price falls in mining giants Mineral Resources Ltd and Fortescue (ASX:FMG) Ltd following their earnings reports added further downward pressure.
The worst-performing sectors for the week were Financials (-7.49%), Energy (-3.98%), Consumer Discretionary (-2.95%) and Information Technology (-1.24%). In contrast, Telcos (+1.62%), Utilities (+1.14%), Consumer Staples (+0.89%) and Health Care (+0.12%) were the only sectors to post gains.
At the stock level, Mineral Resources (-16.24%), Suncorp Group Ltd (-15.14%), NAB (-14.42%) and Super Retail Group Ltd (-14.27%) were among the biggest losers. Meanwhile, Domain Holdings Ltd (+40.97%), Nanosonics Ltd (+32.16%), A2 Milk Ltd (+30.59%) and Mayne Pharma Ltd (+28.57%) recorded the strongest gains.
Earnings reports from companies including Adairs, Ampol, Johns Lyng, Nine Entertainment, Woodside, ZIP, Wisetech, Appen, Domino’s, Flight Centre (ASX:FLT), Woolworths, Coles, Qantas and Harvey Norman are all due this week.
CPI indicator
“The highlight of the economic calendar is Wednesday’s Monthly CPI indicator for January,” writes IG Markets analyst Tony Sycamore said.
“In December, the Monthly CPI indicator showed headline inflation rose by 2.5% in the 12 months to December, up from 2.3% in November. At the same time, it showed annual trimmed mean inflation eased to 2.7% from 3.2% in November.
“The preliminary expectation for the January Monthly CPI indicator is for headline inflation to rise to 2.8% YoY as energy rebates wind down. Trimmed mean inflation is expected to rise marginally to 2.8% YoY from 2.7%.
"The rates market starts the week pricing in a full 25bp rate cut by July and a cumulative 43bp of RBA rate cuts for 2025.”
US markets tumble
US stock markets tumbled on Friday as economic data heightened concerns about a slowdown in the US economy amid rising inflation. Market sentiment was further weighed down by reports of a new coronavirus strain detected in bats in China.
Over the week, the Dow Jones declined 1,118 points (-2.51%), the Nasdaq dropped 2.26% and the S&P 500 lost 1.66%.
Friday’s data added to a series of weaker economic indicators, reinforcing signs that US economic growth is losing momentum. Uncertainty around US trade policy is likely contributing to the slowdown.
Recent developments include soft January retail sales data, Walmart’s cautious earnings outlook and concerns over the US consumer’s role in sustaining GDP growth.
“The final print of the University of Michigan Consumer Sentiment index for February on Friday night was revised down to 64.7 from the preliminary reading of 67.8 and from 71.1 in January. The 5-10-year inflation expectations were revised up to 3.5% from the preliminary reading of 3.3%, the highest since 1995,” Sycamore noted.
“The US Services PMI unexpectedly fell to 49.7 in February from 52.9 prior. The report highlighted that February’s deterioration was mainly due to "increased uncertainty about the business environment, especially regarding federal government policies related to domestic spending cuts and tariffs." Additionally, concerns about rising prices were also noted as a contributing factor to the decline.
“This week, the key focus will be on speeches by several Federal Reserve officials, personal income and spending figures, and the Fed’s preferred measure of inflation: core PCE inflation.”
Nvidia rebounds
Nvidia is set to release its fourth-quarter fiscal 2025 results on Thursday, February 27, at 8:20 am AEDT, following the US market close. After a sharp decline in its share price due to the emergence of DeepSeek, Nvidia has rebounded from a low of $113.01 to a high of $143.44 last week.
The company is expected to report earnings per share (EPS) of $0.84 on revenue of $38 billion, surpassing last quarter’s figures. Investors will closely monitor guidance on future demand and Nvidia’s ability to meet it, alongside any commentary regarding DeepSeek’s impact.
Options pricing suggests a 7.7% share price swing in either direction after the earnings release. Based on Friday’s closing price of $134.43, this implies a potential move up to $145 or down to $124.
European markets edge higher
European sharemarkets rose on Friday, closing out a busy week of corporate earnings. The chemicals sector led gains, climbing 1.9%. The HCOB composite eurozone purchasing managers’ index (PMI) remained steady at 50.2 in February (survey: 50.5).
- The FTSEurofirst 300 index added 0.5% for the session, finishing the week up 0.3%.
- In London, the FTSE 100 was flat on the day but declined 0.8% over the week.
Currency markets mixed
The euro weakened against the US dollar, falling from US$1.0500 to US$1.0448 before settling near US$1.0460 at the US close.
- The Australian dollar slipped from US63.97 cents to US63.51 cents, trading near US63.55 cents late in US trade.
- The Japanese yen strengthened from JPY150.62 per US dollar to JPY148.92, before easing to JPY149.30 at the close.
Commodities trade lower
Global oil prices fell more than US$2 a barrel on Friday, with Brent crude down US$2.05 (-2.7%) to US$74.43 a barrel, and US Nymex crude shedding US$2.08 (-2.9%) to US$70.40 a barrel. Oil posted a weekly decline of 0.5% as investors weighed the fading Middle East risk premium and uncertainty surrounding a potential peace deal in Ukraine.
Base metals saw mixed performance. Copper futures dropped 1% amid concerns over rising inventories in China, ending the week down 2.1%. Aluminium edged up 0.1% for the session and gained 3.1% for the week.
Gold futures slipped US$2.90 (-0.1%) to US$2,953.20 an ounce as investors took profits after a record high in the previous session. Despite this, gold secured an eighth consecutive weekly gain, rising 1.8%, driven by safe-haven demand amid concerns over US President Donald Trump’s tariff plans. Spot gold was near US$2,936 at the US close.
Iron ore futures rose by US13 cents (+0.1%) to a four-month high of US$107.13 a tonne, supported by signs of improving steel demand in China. The steel-making commodity added 0.3% over the week.
What about small caps?
The S&P/ASX Small Ordinaries (XSO) finished 0.22% to the red on Friday to 3,218.00. Over the five days, the index lost 0.53%.
News has trickled in this morning, but you can read about the following and more throughout the day.