Morning Bell 12 February

Wall St started the week in positive territory as investors looked past Trump’s latest tariff talks about a blanket tariff on steel and aluminium imports, and bought into growth areas of the market. The Dow Jones rose 0.38%, the S&P500 added 0.67% and the tech-heavy Nasdaq led the gains with a near 1% rise.

Strength in the US jobs market dampened investor hopes of a near-term rate cut as the latest unemployment data showed the jobless rate in the world’s largest economy fell from 4.1% to 4% in January at the same time 143,000 jobs were added. The Fed has already cut the US cash rate once last year to 4.25% - 4.5%, however, with signals of a stronger labour market, a rise in the inflation rate for the last 3-months and strong retail sales growth, the US central bank is unlikely to cut rates again until these inflationary driver’s ease.

In Europe overnight markets in the region started the new trading week higher with the STOXX 600 gaining 0.58%, while Germany’s DAX added 0.57%, the French CAC rose 0.42% and, in the UK, the FTSE100 ended the day up 0.77%.

Across the APAC region on Monday, markets closed mixed as escalating tensions around Trump’s tariff implications weighed on investor sentiment. Japan’s Nikkei closed flat, South Korea’s Kospi index also ended the day little unchanged, Hong Kong’s Hang Seng rose 1.76% and China’s CSI index rose 0.21% after China’s consumer inflation rose to a 5-month high in January amid higher consumer spend in the lead up to the Lunar New Year.

Locally on Monday, the ASX200 started the new trading week in the red with a 0.34% loss at the closing bell as a sharp sell-off in tech stocks weighed on the local key index.
Reporting season continued on Monday with key names releasing first half results that surprised investors. Trump’s new tariffs on aluminium and steel weighed on the local index early in the session before realising that less than 1% of China’s steel exports went to the US in 2024, and China is Australia’s largest buyer of iron ore which is a key ingredient used to make steel.

JB Hi-Fi faced inflationary pressures and subdued demand in the first half but still posted strong results, with total sales rising 9.8% to $5.67bn, NPAT up 8% to $285.4m, and an interim dividend increase of 7.6% to 170cps. However, investors sold off shares, likely due to a 13.5% rise in inventory and a 9bps drop in inventory turnover. Payables also increased by 16% YoY in H1. CEO Terry Smart’s cautious remarks about retail market uncertainty and heightened competition likely spooked investors yesterday.

Ansell on the other hand had investors buying in on Monday after the global leading protective equipment producer released strong first half results including sales growth of 12.5%, EBIT up 20.9% and a dividend of 22 US cps.

What to watch locally today:

• Ahead of Tuesday’s trading session on the ASX the SPI futures are anticipating the ASX to open the day up 0.37% tracking Wall Street’s positive start overnight.
• On the local reporting season calendar today, we will likely see investors react to results out of global healthcare giant, CSL.
• On the commodities front this morning, oil is trading 2.02% higher at US$72.44/barrel, gold is up 1.68% at US$2907.41/ounce and iron ore is up 0.13% at US$106.37/tonne.
• The AUD has strengthened against the greenback to buy US$0.62, 95.29 Japanese Yen, 50.73 British Pence and NZ$1.11.

Trading Ideas:

• Bell Potter has downgraded the rating on JB Hi-Fi (ASX:JBH) from a buy to a hold and have increased the 12-month price target on the leading tech retail company from $98 to $99/share following the release of the company’s results yesterday. The downgrade to a hold follows the analyst believing JB is currently well valued and limited earnings upgrades in the near-term are priced in at a current PE multiple of around 23x.
• And Trading Central has id