Domino's Dramatic Makeover & Retail Rebounds

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Welcome to Equity Espresso’s Market Recap.

The Aussie sharemarket finished slightly lower on Friday, with the S&P/ASX 200 index dropping 0.1% to 8,511.43, closing the week down 0.2% despite coming within 21 points of its record high. Markets started the session in the green during most of the morning, but an afternoon slump saw it end lower.

Market sentiment remained cautious as investors awaited crucial U.S. employment data, expecting nearly 100,000 fewer jobs than December's 256,000. The Australian dollar strengthened 2.2% over the week to US62.84c after experiencing significant volatility.

Five of eleven sectors declined, led by Energy (-1.45%) stocks. Oil prices moved toward a third consecutive weekly loss, with Brent crude approaching $US75 per barrel but still down 3% for the week. The decline was driven by concerns over Trump's China tariffs impacting demand despite new Iran sanctions from the U.S. administration. Beach Energy (-5.21%) was one of the hardest hit in the sector.

Lithium stocks suffered sharp losses following reports that Chinese battery manufacturer CATL had resumed production at its Jiangxi lepidolite mine just six months after suspending operations. Both Pilbara Minerals (-4.29%) and Liontown Resources (-4.38%) lost ground.

Company News

• Charter Hall Long Wale REIT (-1.28%) maintained its FY25 earnings guidance of 25¢ per security after reporting half-year distributions of 12.5¢ and 3.5% growth in net property income. The company completed $300.4 million in divestments and $11.5 million in acquisitions, with stable portfolio valuations.

• Domino's (+21.30%) announced plans to close 205 unprofitable stores, including 172 in Japan, as part of a comprehensive strategic review. The company expects H1 FY25 underlying profit before tax of $84-86 million and projects $15.5 million in annual savings from closures, though implementing these changes will cost approximately $97 million.

• Nick Scali (+10.50%) reported a 30.2% drop in half-year profit to $30 million, impacted by losses from its newly included U.K. operations. While total revenue rose 10.8%, the Australian and New Zealand businesses exceeded guidance with a $36 million profit. The company declared a fully franked interim dividend of 30¢ per share.

• Neuren Pharmaceuticals (+0.65%) has secured an April meeting with the FDA to discuss Phase 3 clinical trials for its NNZ-2591 drug therapy targeting Phelan-McDermid syndrome. The company expects to begin trials by mid-2025 following this regulatory discussion.

• Sigma Healthcare (+3.18%) has raised its FY25 EBIT guidance to $64-70 million from $50-60 million, driven by strong performance from its Chemist Warehouse supply contract, which began in July 2024. The partnership has shown strong results, with Chemist Warehouse reporting 13% sales growth to $5.2 billion and 19 new store openings in the December half.

   

Wall Street

The S&P 500 (+0.36%) and Nasdaq (+0.51%) advanced on Thursday, while the Dow Jones (-0.28%) slipped in a volatile session. Investors remained cautious ahead of Amazon's earnings and Friday's jobs report, with Amazon shares rising 1.1% before releasing results that showed strong revenue but disappointing cloud performance.

Eight of eleven S&P 500 sectors finished higher, led by Financial Services and Consumer Staples, while energy stocks posted the largest declines.

Eli Lilly (+3.35%) reported Q4 earnings above estimates despite sales falling short due to lower Mounjaro pricing. While demand for Zepbound and Mounjaro remained strong, the company maintained its 2025 guidance of $58-61 billion in sales. Ford (-7.49%) shares dropped to a four-year low despite beating Q4 estimates, as the company provided weaker-than-expected 2025 guidance, citing market-related challenges.

In after-hours trading, Amazon exceeded Q4 expectations with earnings of $1.86 per share on revenue of $187.79 billion, though advertising slightly missed estimates at $17.3 billion. However, shares dropped 5% in after-hours trading after the company provided disappointing Q1 guidance of $151-155.5 billion, below analyst expectations of $158.5 billion. Amazon attributed the lower forecast to a large $2.1 billion impact from foreign exchange rates.

S&P500 Sector Performance

Economic Data

• The Reserve Bank of India (RBI) lowered its key repo rate by 25 bps to 6.25% during its February meeting, marking the first rate cut since May 2020.

• U.S. Initial jobless claims rose by 11,000 from the previous week to 219,000 in the last week of January 2025, above market expectations of 213,000.

• U.S. Unit Labor costs in the nonfarm business sector increased 3.0% in the fourth quarter of 2024, after a 0.5% rise in the third quarter and below market expectations of 3.4%.

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Quick Singles

🌎️ Around The Globe

• Apollo Global Management is developing a marketplace to facilitate the trading of private assets, partnering with banks, exchanges, and fintech companies to provide real-time pricing and information for private credit deals.

• Federal workers face a deadline tonight to either return to office or accept an eight-month salary buyout, with 20,000 already taking the offer. The initiative, part of Trump's government restructuring plans overseen by the Department of Government Efficiency, aims to reduce federal spending.

• IMF Deputy Managing Director Gita Gopinath stated it's premature to assess the impact of new U.S. tariffs, emphasising the importance of international cooperation in resolving trade disagreements and maintaining conducive trading conditions.

• OpenAI announced it's considering various U.S. states as potential locations for its Stargate data centre project, positioning the initiative as crucial for maintaining American A.I. leadership over China.

• Starbucks has introduced a 12-item limit on mobile orders under new CEO Brian Niccol's reforms, aiming to reduce wait times and improve barista workflow.

• UnitedHealth has contacted the SEC regarding Bill Ackman's deleted social media post suggesting he would short the company's stock, claiming the healthcare giant's profits may be overstated due to its coverage practices.

Markets

ASX Company Movers

Commodity Prices

Bonds

Forex

Global Health Check

ETF Prices

🔍️ ETF Watch

An intriguing new ETF to keep an eye on:

VanEck launched Australia's first equity long-short ETF (ASX: ALFA) on January 23, 2025, offering investors access to an actively managed portfolio combining both long and short positions in Australian equities.

The fund analyses thousands of real-time data points to identify statistical probabilities for stock performance. Using a combination of quantitative and technical trading signals and macroeconomic data, ALFA ranks approximately 230 ASX stocks on a zero-to-one scale, selecting its highest conviction positions.

Australian Index

Australian Sectors

Global Indices & Sectors

Global Strategy

Property & Infrastructure

Fixed Income

Mixed Assets

Geared

*1-year, 3-year and 5-year returns are calculated as of December 31, 2024.

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DISCLAIMER: Please note that the information provided in this newsletter is for educational purposes only and should not be considered financial advice. It is not intended to encourage you to buy/sell assets or make economic decisions. We strongly recommend conducting your research before making any investment.