MARKET SUMMARY

Share markets fell – Tariff uncertainty, reporting season and weaker US data occupied the minds of investors in February. In local currency, the ASX200 (-3.8%) underperformed global equity markets. The MSCI World ex-Aust index fell -1.15% (in USD terms), but in $A terms global equities only fell 0.36%. MSCI China rallied 11.5% as investors bought Chinese tech stocks, European markets (+3.4%) rose on hopes of peace deals, while Japanese equities (-6.1%) were negatively impacted by US tariff talk, rate hike expectations, increasing inflation and a rising Yen.  A rotation out of US tech continued (Magnificent 7 down 7.1% and Nasdaq down 3.9%), with the US underperforming the MSCI World for the 3rd month in a row..

Defensives outperformed – Within the ASX, ‘Defensive’ sectors outperformed as investors sought safety.  The best performing sectors in the ASX200 were Utilities (+3.2%), Communication Services (+2.6%) and Consumer Staples (+1.5%). Conversely, the worst performers were Information Technology (-12.3%), Healthcare (-7.7%) and Property (-6.4%). The banks (-5.2%) delivered their worst monthly return in more than two years. Taking market capitalisation into account the key contributors to ASX gains were Computershare, Telstra and Brambles while National Australia Bank, Goodman Group, CSL and Westpac all weighed on the market.  Globally, Consumer Staples, REITs and Financials performed best. 

Reporting Season – In the US, reporting season delivered results broadly in-line with expectations. Earnings growth was stronger than expected, but companies were not rewarded for their beats and forward earnings guidance for 2025 was relatively subdued with estimates revised lower. Relative to recent reporting periods the Magnificent 7 didn’t surprise as positively. In Australia, listed corporates delivered another solid set of numbers with slightly more earnings (EPS) and dividend (DPS) beats than misses. Share price volatility was a notable feature with high valuations leaving little room for disappointment. While guidance surprises were balanced, aggregate earnings and dividends were revised slightly lower (down 1-2% for FY25 and FY26) and was broad-based in nature.  The ASX200 performed more poorly in the second half of the month as result quality worsened..

AREITS fell as Goodman Group raised capital – Australian Real Estate Investment Trusts (AREITs) dropped 6.1% over the month impacted by the surprise $4bn equity raise conducted by Goodman Group (GMG) to fund its expanding Data Centre development pipeline. GMG fell 14.1%. Scentre Group’s (SCG) soft result and guidance also impacted. Within the different sub-sectors, residential sales picked up in 4Q, Retail malls recorded solid metrics including strong occupancy levels, Office trends stabilised albeit remain mixed, and Industrial sector growth remains strong but is slowing. In contrast, global REITs rose 3%.