Markets Red Again: Zip Soars while Domino's Falls

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Welcome to Equity Espresso’s Market Recap.

The Aussie share market resumed its downtrend on Tuesday after yesterday’s positive day, with the S&P/ASX 200 index sliding 0.5% to 8265.10 points, making it six red days from the last seven for the major index. Eight of the eleven main index sectors declined, led by Consumer Discretionary (-2.66%) and Technology (-1.58%).

Wall Street was mostly down overnight. The negative sentiment came after U.S. President Trump confirmed that tariffs from Canada and Mexico would start next month, ending a month-long suspension of the planned import taxes. Trump's directive to limit Chinese spending in key American sectors further dampened the market mood.

Wesfarmers retreated 3.3% after trading ex-dividend, while Domino's Pizza (-10.47%) saw a dramatic slide following already announced restructuring costs. Banking stocks also experienced profit-taking, with Commonwealth Bank (-1.26%) and NAB (-1.42%) both falling 1.4%.

ASX Company News

• Amplitude Energy (+2.50%) reported a $7.57 million profit, reversing last year's loss, driven by record production and $133.7 million in sales. CEO Jane Norman expects continued growth in operating margins and cash flow.

• Domino's Pizza (-10.47%) reported a $22.2 million loss due to restructuring, closing 205 stores, with revenue down 6.4% to $1.17 billion. Australian operations remained strong amid global challenges.

• Ingenia Communities (+1.24%) experienced strong growth, settling 199 turnkey homes (40% increase) and boosting gross development profit to $53.5 million. Rental income rose 10%, EBIT jumped nearly 50%, and statutory net profit more than doubled to $87.6 million.

• Johns Lyng Group's (-33.42%) shares plummeted after downgrading 2025 earnings guidance to $126.5 million, a 4.5% reduction. First-half net profit dropped to $20.8 million, prompting the company to implement a cost-reduction program to maintain financial discipline.

• Mercury NZ (-1.43%) reported a net loss of NZ$67 million in the first half, a 139% decrease from the previous year's NZ$174 million profit due to reduced hydro generation. Despite a 4% drop in earnings to NZ$418 million, the company slightly increased its interim dividend to 9.6¢ per share.

• Nine Entertainment's (+3.68%) group earnings dropped 15% to $268.4 million amid weak advertising conditions, though revenue marginally increased. Domain's 15% contribution partially offset the decline.

• Sims (+1.49%) saw underlying earnings surge 184% to $73 million, with net profit jumping 401.4% to $35.1 million, driven by strong North American metal and lifecycle services performance.

• Viva Energy's (-26.88%) benchmark profit fell 20.1% to $254.2 million due to declining refining margins and lower retail demand. Despite a 12.7% sales increase to $30.14 billion, the company reported a net loss and reduced its dividend, anticipating improved conditions in the year's second half.

• Woodside Energy (+2.78%) saw net profit surge 115% to $US3.57 billion despite a 13% drop in underlying profit due to lower oil and gas prices. The company reached record production of 193.9 million barrels, driven by the new Sangomar oil project, and continues progress on its Scarborough project, which is 80% complete and on track for 2026.

• Zip's (+13.87%) cash earnings surged 117% to a record $67 million, with transaction value reaching $6.2 billion, up 24%. The buy now, pay later provider maintained low bad debt levels at 1.6% while experiencing strong growth, particularly in the US market.

Wall Street

Markets were mixed on Wall Street overnight, with the Nasdaq (-1.21%) falling by more than 1% on Monday, marking its third consecutive loss and fourth daily drop of more than 1% in February. The S&P 500 (-0.50%) closed slightly lower for the third straight day, while the Dow Jones (+0.08%) managed a small gain.

The Healthcare (+0.75%) sector led percentage gains, while Technology (-1.43%) was the biggest laggard. Nvidia (-3.09%), Broadcom (-4.91%), Amazon (-1.79%), and Microsoft (-1.03%) were among the top drags on the S&P 500, with Palantir Technologies (-10.53%) being the tech sector's biggest percentage decliner. Interest rate futures indicate traders expect the Fed to leave borrowing costs unchanged until June.

Berkshire Hathaway's Class A (+4.00%) shares jumped after the company reported a 71% surge in fourth-quarter operating profit to $14.5 billion, led by a 302% increase in insurance underwriting. Berkshire’s cash pile grew to another record, $334.2 billion, up from $325.2 billion at the end of the third quarter. Domino's Pizza (-1.46%) stock declined after the company reported fourth-quarter earnings and revenue that fell short of analysts' expectations. The pizza chain posted earnings of $4.89 per share on revenue of $1.44 billion, compared to the expected $4.90 per share on revenue of $1.48 billion.

S&P500 Sector Performance

Economic Data

• The Bank of Korea (BoK) lowered its base rate by 25 bps to 2.75% at the February 2025 meeting after keeping the rate unchanged in January.

• European Union Passenger car registrations dropped by 2.6% year-on-year to a four-month low of 831,201 units in January 2025, reversing a 5.1% growth in December 2024.

• The Euro Area’s Consumer Price Inflation rate was confirmed at 2.5% in January 2025, the highest rate since July 2024, driven primarily by a sharp acceleration in energy costs.

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🌎️ Around The Globe

• Apple reaffirmed its commitment to invest hundreds of billions of dollars in the U.S. over the coming years. The company plans to spend $500 billion in the next five years, hiring 20,000 new employees and producing AI servers.

• Coinbase is expected to have its SEC enforcement case dismissed, marking a significant shift in cryptocurrency regulation. The largest U.S. crypto exchange reached an agreement with the SEC, pending approval from the agency's commissioners.

• Hooters is reportedly preparing for a potential bankruptcy filing as it collaborates with creditors to restructure its operations. The company has engaged Ropes & Gray to assist, and while no final decision has been made, a Chapter 11 filing could occur within two months.

• Huawei is set to release its tri-folding phone, the Mate XT, with a hefty price tag of $3,600 when it becomes available outside of China. The device offers versatile screen configurations: a single screen for quick tasks like taking photos or making calls, a double screen for reading, and an unfolded triple-screen layout providing a 10.2-inch display for multitasking.

• SoundCloud has partnered with Live Nation-owned Ticketmaster and Universe to allow artists to customise event listings on their profiles. The collaboration will create more promotional opportunities for artists through a new program with Ticketmaster.

• Starbucks CEO Brian Niccol announced the company will lay off 1,100 corporate employees to streamline operations and focus on its core business. In a message to employees, Niccol explained that the decision aims to simplify the company's structure, eliminate redundancies, and create more efficient teams.

Markets

ASX Company Movers

Commodity Prices

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Global Health Check

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Australian Index

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Mixed Assets

Geared

*1-year, 3-year and 5-year returns are calculated as of January 31, 2025.

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