From Valentine's High to a Seven-Month Low

Good Evening,

Welcome to Equity Espresso’s Market Recap. Firstly, we hope everyone in QLD and NSW impacted by the wild weather stays safe over the next few days.

Now, onto stock markets. What can you say other than Thank God It's Friday? Time to shut off the PC, put the phone on flight mode, and if you’re lucky, enjoy the long weekend free of the danger of cyclones.

This year has kicked off dismally for stock markets. But it pays to remember the bigger picture. The previous two calendar years delivered solid gains of +7.5% and +7.8%, respectively. Counting dividend income, this climbs to over 10%.
Does this mean we can't grumble about current losses? Of course not. But beyond venting frustrations, what's the best approach during market downturns? Stop obsessively checking your portfolio values every 15 minutes (they’re red anyway) and instead start identifying quality stocks now trading at attractive discounts.

Speaking of, watch for our investment ideas featuring undervalued and beaten-down stocks in next week's newsletter.

So what happened today? Markets finished lower again for the fourth day running.
The S&P/ASX200 index lost 146.5 pts. or 1.81% to finish at 7,948.20, falling below the 8,000 mark and hitting a nearly seven-month low. Ouch!
The major index is now down 2.6% in 2025 and 7.1% since its last all-time high, which was set on February 14, only 16 trading days ago.
Ten of the 11 sectors finished the day lower, with Technology (-3.04%), Real Estate (-3.00%) and Financials (-2.49%). The only bright spot was Consumer Staples (+0.35%), with rises from Woolworths (+0.33%) and Coles (+0.54%).

Wall Street was hit harder overnight, with the NASDAQ officially hitting ‘correction’ territory, having fallen 10.6% since its December 16 high. The fall came despite President Trump temporarily exempting certain Canadian and Mexican goods from his recently imposed 25% tariffs until April 2.
Markets didn’t seem to care, selling off despite the seemingly positive news. Truth be told, no one knows what the impact of all these tariffs will be, and that’s even if they go ahead at all. The problem? Markets don't like uncertainty, and with the erratic, flip-flopping nature of this tariff policy, investors are facing the one thing they fear most: the certainty of continued uncertainty.

We’ll close this section with a well-known but apt quote by Mark Twain: “History doesn’t repart itself, but it often rhymes” ⬇️ 

ASX Company News

• Insignia Financial (+9.89%) remains in a never-ending auction. Two bidders, Bain Capital and CC Capital Partners, made separate $5.00 per share bids for the business. Insignia will allow both parties to conduct due diligence and negotiate a potential acquisition.

• Orica (+0.53%) has warned of a $300-350 million profit hit due to significant restructuring costs, primarily from its Latin American operations ($290-335 million) and EMEA assets ($10-15 million). Despite this, the commercial explosives operator expects first-half earnings to exceed forecasts due to strong performance across all business segments, with capital expenditure remaining in line with 2024 levels.

• PolyNovo's (-13.04%) shares plunged after the company confirmed it had asked CEO Swami Raote to step down. In response to an article in The Australian, PolyNovo acknowledged holding a "confidential discussion" with Raote last week, requesting he cease employment by June 2025.

• Spartan Resources (-1.39%) nearly doubled its half-year loss to $44.4 million from $26.2 million as the gold explorer invested $25 million in exploration activities. The increased loss resulted from a $15.9 million royalty obligation revaluation following higher resource estimates at Dalgaranga and a $14.2 million impairment expense.

• Star Entertainment (-) confirmed it's in discussions with Hong Kong joint venture partners Chow Tai Fook Enterprises and Far East Consortium regarding the potential sale of its 50% stake in The Star Brisbane integrated resort.

Wall Street

U.S. markets extended their losses on Thursday, with the Dow falling 0.99%, the S&P 500 dropping 1.78%, and the Nasdaq plunging 2.61%, officially hitting ‘correction’ territory. The Nasdaq has now fallen 10.4% from its December 16 closing high, crossing the 10% threshold that defines a technical correction. The CBOE Volatility Index, Wall Street's "fear gauge," jumped to 24.87—its highest close since December 18.

Another day, more tariff news. Donald Trump has temporarily exempted certain Canadian and Mexican goods from his recently imposed 25% tariffs until April 2, when he plans another round of global retaliatory tariffs. The reprieve covers items like potash used in fertilisers but excludes some Canadian energy products (which face a 10% tariff) and other goods such as Mexican-made computers, which remain subject to the full 25% duty.

The selling on Friday was broad-based, with 10 of 11 S&P 500 sectors finishing lower, led by steep declines in Consumer Discretionary (-2.93%), Real Estate (-2.75%), and Technology (-2.65%) stocks. Energy (+0.50%) was the sole sector posting gains.

Victoria's Secret (-8.24%) shares fell after the lingerie retailer issued weaker-than-expected Q1 guidance, forecasting revenue of $1.3-1.33 billion versus analysts' $1.39 billion projection. The company predicted 2024 sales of $6 billion—its third consecutive annual decline. Marvell Technology (-19.81%) shares plummeted despite the semiconductor company slightly beating fourth-quarter expectations with adjusted earnings of 60 cents per share on $1.82 billion revenue, compared to analysts' forecasts of 59 cents and $1.80 billion.

S&P 500 Sector Performance

Economic Data

• The Canadian Trade Surplus widened to C$4.0 billion in January 2025, the largest since May 2022 and well above market expectations of C$1.3 billion.

• DOGE has taken affect - U.S. employers announced 172K job cuts in February 2025, the highest value since July 2020, more than tripling the 49.7K in January.

• The U.S. posted a record trade deficit of $131.4 billion in January 2025, up from a $98.1 billion shortfall in December 2024 and exceeding forecasts of a $127.4 billion gap.

• The European Central Bank (ECB) lowered the three key interest rates by 25 basis points, as expected, reducing the deposit facility rate to 2.50%, the main refinancing rate to 2.65%, and the marginal lending rate to 2.90%.

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Quick Singles

🌎️ Around The Globe

• Apple is reportedly developing a premium foldable iPhone for 2026 with a price tag exceeding $2,000. The device will feature a crease-free 7.8-inch inner display, 5.5-inch outer screen, and ultra-thin 4.5mm unfolded profile.

• Klarna, the Swedish-based BNPL company, plans to raise at least US$1 billion in a NYSE initial public offering, with a filing expected next week. Bloomberg reports that the fintech company is targeting a valuation of US$15 billion.

• Microsoft will invest an additional 5.4 billion rand ($296.81 million) to expand its cloud and AI infrastructure in South Africa by the end of 2027. The investment aims to meet growing regional demand for the company's Azure services.

• Novo Nordisk has launched NovoCare Pharmacy, offering its blockbuster weight-loss drug Wegovy at $499 per month—less than half its standard $1,350 list price. The service is exclusively available to American patients who are uninsured or whose insurance doesn't cover obesity treatments.

• OpenAI is reportedly developing specialised AI agents with premium price tags ranging from $2,000 to $20,000 per month, according to The Information. These task-specific agents will target different professional needs, with the highest-priced option supporting advanced research.

• Target shoppers are diversifying away from the retailer, starting a 40-day boycott over the company’s shift away from diversity, equity and inclusion (DEI) policies. In January, Target announced it was eliminating hiring goals for minority employees.

Markets

ASX Company Movers

Commodity Prices

Bonds

Forex

Global Health Check

ETF Prices

🔍️ ETF Watch

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 January 31, 2025.

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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.