The Overnight Report: Tech Rallies, CPI Looms

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This story features KELSIAN GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: KLS
The company is included in ASX300 and ALL-ORDS

US markets were boosted by a recovery in software and technology stocks with indices closing higher.

The S&P500 rose 0.77% while gold and oil prices traded slightly weaker. 

After a flat day yesterday, with more selling depressing software and technologty stocks further, ASX200 futures are pointing to a strong start ahead of the January CPI print to be announced at 11.30 AEST.

In case anyone missed it: software and technology stocks rallied on Wall Street overnight.

Good Morning,

The Australian market ended broadly flat on Tuesday, the ASX200 slipped -4 points to close at 9,022.

Six out of eleven sectors rose led by gains in energy and miners, offset by further losses in technology, down another -3.5%, bringing that sector’s one-month performance to down -23.56%.

Continued releases of corporate results this morning has seen SiteMinder ((SDR)) narrow its losses, while Sea Forest’s ((SEA)) H1 loss has widened. Fortescue ((FMG)) has followed the examples of its two big brothers and raised its dividend for shareholders.

Tabcorp’s ((TAH)) net profit has retreated by -14% and for ARN Media ((A1N)) the retreat is -23%. Management at Flight Centre ((FLT)) has stuck with FY26 guidance.

They’d all be jealous about what DroneShield ((DRO)) has achieved over the year past, no doubt: underlying profit before tax rose 1686% to $33.3m, while SaaS revenue increased 312% to $11.6m.

Much more is coming out today.

FNArena’s corporate results monitor: https://fnarena.com/index.php/reporting_season/

What happened overnight, NAB Markets Today extract

There has been a tech led rally in stocks ahead of Nvidia’s results with the NASDAQ retracing most of the previous session’s losses. Bonds traded a tight range with the US 10-year remaining near 4.03%.

The US dominated the economic calendar overnight. The US Conference Board index rose to 91.2 in February, from 89.0 in January and was well above consensus forecast of 87.1. 

Strong gains in expectations (index rose 4.8pts to 72.0) were partially offset by a fall in current conditions (-1.8pts). 

Driving the improved outlook were better employment prospects, income expectations and an improvement in business conditions. That said, current conditions are seen to be weak with the share of households saying jobs are hard to get rising from 19% to 20.6%. 

In addition, comments on prices, inflation and the cost of goods were seen to still be top of mind for consumers while comments on trade and politics increased in the month. 

The cut off for the survey was February 17, so ahead of the recent ruling by the US Supreme Court on tariffs. 

The improvement in the conference board measure of confidence for February is in line with the gain seen in the Michigan survey of consumer confidence, however the gains in the latter were driven by current conditions not expectations for the future. 

US regional surveys weakened in the month of February. Philly Fed non-manufacturing report posted a large drop down -17.3 from down -4.2 with new orders down sharply to -9.3 from up 5.5.

While there were positive readings on employment, index at a 16-month high, of note was the sharp rise in prices, up to 40.7 from 34.5. The Richmond Fed manufacturing index also surprised to the downside with the index dropping to -10 from -6 with weakness in news orders, shipments and employment.

The US 10% global tariff came into effect under Section 122. While Trump has said this will be raised to 15%, and newswires are reporting the Trump administration is working on changing the tariff to 15%, to date no formal order has been given on this. 

It is being reported the EU’s assessment of President Trump’s new tariff policy would result in tariffs on some of the EU’s exports (including cheese and other agricultural products) rising above the level agreed on in the US-EU trade agreement. The European Parliament suspended work on approving the trade deal on Monday, seeking clarity from the US administration on the new tariff.

In terms of Fed speakers, Goolsbee noted the shifts in US global tariffs are likely to cause more uncertainty for businesses and it is his view this uncertain backdrop has been a driver of the current low hiring, low firing dynamic. 

As for Fed policy, Goolsbee said that he remains “optimistic that there can be more rate cuts this year. But that hinges on seeing actual progress on inflation that shows we are on a path back to 2%,” 

Fed Governor Cook was also speaking and while she did not comment on the outlook for monetary policy in the near-term, she warned the Fed may not be able to counter rising unemployment driven by AI.

“If AI continues to raise productivity, economic growth could remain strong, even as churn in the labor market leads to an increase in unemployment. In a productivity boom such as this, a rise in unemployment may not indicate increased slack,” 

She noted that the Fed is incorporating AI into its forecasts, citing its possible effects on the neutral rate and the impact of data-centre investments on economic growth.

In other news, China has blacklisted 20 Japanese entities including top Japanese military suppliers including the shipbuilding and aerospace affiliates of Mitsubishi Heavy Industries while also placing an additional 20 entities, including automakers Subaru and Hino Motors, on a monitor list.

The biggest mover in currencies has been the Yen which is weaker following reports in a local newspaper that the Japanese Prime Minister, Takaichi, raised concerns over more rate hikes in her meeting last week with BoJ Governor Ueda. 

Given there was an expectation she would shift her stance on monetary policy, this latest news brings uncertainty back into the market, and leaves investors keenly interested to see who her nominations are for the two new BoJ board members, expected to be announced today.

Equity markets have rebounded overnight. European indices opened weaker, following on from the US/Asia session but recovered as the day unfolded. US stocks have been able to retrace some of the previous sessions losses. 

Tech stocks led the rally with Tech-Software ETF up 2%. Fuelling optimism was news Meta Platforms plans to spend billions of dollars on Advanced Micro Devices software. The tech led rally in stocks came ahead of Nvidia’s results which are out on Wednesday and comments from Anthropic it is working with Salesforce as well as Service Now.

It was a range bound session for bonds overnight. US 10-years remain near the key 4% level, currently at 4.03%. On the issuance front, Spain issued EUR7bn, in a sale that drew more than EUR119bn of investor demand. The US issued US$69bn of 2-year notes with demand lacklustre relative to previous auction.

Australia CPI (Jan) – We expect headline CPI and trimmed-mean inflation to be unchanged at 3.8% and 3.3% y/y, respectively. The market consensus is 3.7% for headline (range is 3.3% to 4.0%) and 3.3% for trimmed mean (range 3.2% to 3.4%). 

Headline inflation will be boosted by the unwinding of most remaining electricity subsidies, though this is expected to be offset by softer fuel and travel prices and some policy changes that are expected to weigh on health and childcare inflation. 

The release will help firm our 1Q trimmed-mean inflation forecast of 0.8% q/q, which is below the RBA’s February SoMP forecast of 0.9% q/q.

Australian Construction Work done (4Q2025) – The first of the investment partials ahead of 4Q GDP on 4 March, we pencil in a 1.0% q/q gain for private construction work done.

3Q’s very strong growth in both residential and non-residential building could slow, but is expected to remain positive in the fourth quarter. Engineering work done has been very volatile over the last two quarters due to the import and installation of LNG equipment in the Northern Territory.

Macro Talking Points, MFS Investment Management, Benoit Anne extract

Gross Deceiving Product. At face value, the latest US GDP print for Q4 was very disappointing, slowing to 1.4% (QoQ annualized) and massively undershooting consensus expectations. 

Is the US economy prone to serious slowdown risks after all?

No, we do not believe so. The reality is quite different, in our view. This GDP print was essentially an aberration, partly reflecting the impact of the government shutdown as well as adverse trade numbers. When looking at the underlying economic activity, the signals remain solid.

The US consumer is still active on the consumption front, especially when it comes to services, and more importantly, investment continues to be a major contributor to economic growth. Our Chief Economist, Erik Weisman, even believes the productivity backdrop is supportive, which bodes well for the longer-term growth outlook.

For now, the uptick in productivity we have observed still has little to do with AI but reflects broader strength across sectors. If and when the AI-related productivity shock kicks in, this could potentially put the US economy on an even stronger trajectory.

Elsewhere, we are also observing stronger manufacturing numbers, in particular the new orders, a leading indicator, which bodes well for the period ahead. Even housing, a sector that has been struggling, seems to be showing early signs of green shoot. Overall, we believe the macro backdrop remains supportive of risky assets and credit. And if the Fed happens to deliver rate cuts, we could enjoy another macro sweet spot. 

We are well past the peak of trade policy uncertainty. The past few days may have felt like a rollercoaster, with first the Supreme Court striking down the IEEPA tariffs, which triggered a White House response to reinstate global tariffs under Section 122, initially set at 10% and subsequently raised to 15%.

On balance, this leads to a modest decline in the effective tariff rate. In addition, the implementation of the new tariffs faces more restrictions, as they technically expire after 150 days.

The White House would have to look at other tariff schemes to extend these after the summer. The countries that stand to benefit the most from the latest tariff changes include China and some other EM Asian economies. Separately, one interesting consideration is the status of the potential tariff refunds, an item that the Supreme Court did not opine upon. US importers are now likely to seek out refunds through legal action.

Overall, it is important to note we are far away from the stress caused by Liberation Day back in April last year. With that in mind, we do not anticipate the latest trade policy developments will trigger a major risk aversion shock.

Public vs. private. This is a hot topic in our client meetings, although this is probably the wrong way to frame the discussion. Indeed, it should be: public and private. There is room for both in investors’ strategic asset allocations, especially when it comes to larger institutional clients.

The real question is: how large should your exposure to private credit be?

Not too much is our short answer. Exposure to private credit does make sense for the right type of investors, given their differentiated risk profile and time horizon, but there is no denying that stress has been mounting in that asset class.

Last week was a particularly bad week for private credit funds, after some news of fund gate-shutting by a large participant. This is likely to revive the cockroach narrative, in our view. It is worth noting that public high yield, in contrast, seems relatively immune to similar headline risks.

In fact, the fundamentals underpinning US yield have improved substantially over the past couple of years, with the share of BB credits as high as it has ever been in the HY index.

This is mainly because of the exodus of the lower-rated names to private credit. The default forecast numbers tell the story very clearly. According to Moody’s, the default in US HY bonds stood at 3.4% in January, a highly reassuring level. In contrast, the default rate for leveraged loans stood at 5.5%, significantly higher. 

While there are no data available, defaults in private credit are likely to be even more elevated than for loans, so there is definitely a fundamental gap widening between public and private. To be clear, while private credit has grown substantially in size as an asset class, it is still far from having gained systemic risk status for the broader financial system. Right now, this may feel like a good thing. 

Why selectivity and resilience matter more than ever. We believe today’s market environment strengthens the case for portfolio resilience. While headline indices have continued to rise, the underlying market structure has shifted in important ways that are not visible from index-level returns alone.

For advisers and clients alike, this matters because it changes where risks sit and where long-term opportunities are most likely to emerge. Stock-level volatility has increased, yet correlations between individual stocks remain unusually low. Historically, rising volatility has pushed correlations higher as macro risks dominate and markets move together.

Today, the opposite is occurring. Outcomes are increasingly driven by company-specific fundamentals, differences in business models, balance-sheet strength, execution, and capital allocation. Software offers a clear illustration.

As artificial intelligence reshapes business models, earnings disappointments and strategic missteps have led to sharp de-ratings, often with little forgiveness. At the same time, a smaller group of companies is adapting successfully and continuing to compound, widening the gap between winners and losers. Breadth beneath the surface remains healthy.

Around two-thirds of S&P500 stocks are outperforming the index year-to-date, highlighting a broad opportunity set for selective investors. Yet index-level returns remain dominated by a narrow group of mega-cap names.

The impact of this concentration is meaningful. A -10% decline in the so-called “Magnificent Seven” would translate into roughly a -3.5% fall in the S&P 500, all else equal. For the index to remain flat, the remaining 493 stocks would need to collectively deliver gains of approximately 5.4%.

This helps explain why index performance can appear smooth, even as dispersion across individual stocks continues to rise.

At the same time, the implications of AI are starting to show up across industries. Structural themes such as data-center build-out (where execution will determine winners), AI enablement, value strategies, and real assets continue to offer support. But success increasingly depends on how exposures are chosen, not simply whether they are owned.

In our view, this is an environment where thoughtful, active decision-making matters, both to manage risk and to capture opportunity, particularly where dispersion, concentration, and execution risk increasingly drive outcomes (contribution from Ross Cartwright, Lead Strategist – Strategy and Insights Group).

Corporate news in Australia

-Kelsian Group ((KLS)) is selling tourism assets to Journey Beyond for $161m

-Canva acquires Cavalry and MangoAI to increase motion design and AI-powered marketing tools

-Private equity, KKR and Bain, have cooled on Domino’s Pizza Enterprises ((DMP)) and are unlikely to bid to repair work and a softer sales outlook

-Insignia Financial’s ((IFL)) share price is nearing CC Capital’s $4.80 offer, casting doubt on the $3.3bn takeover 

-Loss making software company Culture Amo has put plans for an IPO on the back burner amidst global technology sell off

-CoStar is selling Domain’s agent workflow software platform as part of the simplification strategy

-Media reports suggest a block trade from Cuscal is likely

On the calendar today:

-AU 4Q Construction Work Done

-AU Jan CPI

-AU RBA Gov Bullock Speaks

-EZ Jan Inflation (HICP)

-AMPLITUDE ENERGY LIMITED ((AEL)) 1H26 Earnings

-APPEN LIMITED ((APX)) 1H26 earnings report

-AIRTASKER LIMITED ((ART)) earnings report

-AVA RISK GROUP LIMITED ((AVA)) 1H26 earnings report

-ACCENT GROUP LIMITED ((AX1)) earnings report

-BAPCOR LIMITED ((BAP)) 1H26 Earnings

-BIG RIVER INDUSTRIES LIMITED ((BRI)) 1H26 Earnings

-CENTURIA CAPITAL GROUP ((CNI)) 1H26 Earnings

-DOMINO’S PIZZA ENTERPRISES LIMITED ((DMP)) 1H26 Earnings

-DURATEC LIMITED ((DUR)) 1H26 Earnings

-EBOS GROUP LIMITED ((EBO)) 1H26 Earnings

-EML PAYMENTS LIMITED ((EML)) 1H26 Earnings

-ENERGY ONE LIMITED ((EOL)) 1H26 earnings report

-FINEOS CORPORATION HOLDINGS PLC ((FCL)) 1H26 earnings report

-FLIGHT CENTRE TRAVEL GROUP LIMITED ((FLT)) 1H26 Earnings

-FORTESCUE LIMITED ((FMG)) 1H26 Earnings

-GENERATION DEVELOPMENT GROUP LIMITED ((GDG)) 1H26 Earnings

-GEMLIFE COMMUNITIES GROUP ((GLF)) earnings report

-GEMLIFE COMMUNITIES GROUP ((GLF)) FY25 Earnings

-GROWTHPOINT PROPERTIES AUSTRALIA ((GOZ)) earnings report

-HELIA GROUP LIMITED ((HLI)) FY25 Earnings

-HELLOWORLD TRAVEL LIMITED ((HLO)) earnings report

-IMRICOR MEDICAL SYSTEMS INC ((IMR)) earnings report

-IRESS LIMITED ((IRE)) FY25 Earnings

-JUMBO INTERACTIVE LIMITED ((JIN)) earnings report

-KOGAN.COM LIMITED ((KGN)) earnings report

-L1 GROUP LIMITED ((L1G)) 1H26 Earnings

-LIGHT & WONDER INC ((LNW)) FY25 Earnings

-LYNAS RARE EARTHS LIMITED ((LYC)) 1H26 Earnings

-MACQUARIE TECHNOLOGY GROUP LIMITED ((MAQ)) earnings report

-MERIDIAN ENERGY LIMITED ((MEZ)) earnings report

-NIDO EDUCATION LIMITED ((NDO)) 1H26 earnings report

-NEXTED GROUP LIMITED ((NXD)) 1H26 earnings report

-OOH!MEDIA LIMITED ((OML)) ex-div 4.00c (100%)

-QORIA LIMITED ((QOR)) 1H26 earnings report

-RESIMAC GROUP LIMITED ((RMC)) 1H26 Earnings

-STEADFAST GROUP LIMITED ((SDF)) 1H26 Earnings

-SITEMINDER LIMITED ((SDR)) 1H26 Earnings

-SEA FOREST LIMITED ((SEA)) 1H26 Earnings

-SILEX SYSTEMS LIMITED ((SLX)) 1H26 Earnings

-SERVICE STREAM LIMITED ((SSM)) 1H26 earnings report

-TABCORP HOLDINGS LIMITED ((TAH)) 1H26 Earnings

-WOOLWORTHS GROUP LIMITED ((WOW)) 1H26 Earnings

-WISETECH GLOBAL LIMITED ((WTC)) 1H26 Earnings

-YANCOAL AUSTRALIA LIMITED ((YAL)) FY25 Earnings

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

The Australian share market over the past thirty days…

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

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