Rate Cut Dreams & Casino Nightmares

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Welcome to Equity Espresso’s Market Recap.

The Australian share market retreated on Friday, with the S&P/ASX 200 Index down 0.42% to 8,294.1 points despite a positive start to early trading. The decline was broad-based, with ten out of eleven sectors falling, led by Financials (-1.17%) and Consumer Staples (-0.91%). The Australian dollar showed some resilience, trading at US61.99¢ after recovering from a fresh two-year low overnight.

The major banks saw sharp falls, with the CBA (-1.73%) and Westpac (-1.69%) the hardest hit. Woolworths (-1.18%) and Endeavour Group (-1.45%) were the worst performers in the Staples sector.

Mining (+0.96%) stocks were the day shining light, with Rio Tinto (+2.22%) and BHP Group (+1.04%) the best performers of the majors, coupled with strong performances from Lynas Rare Earths (+2.04%) and Iluka Resources (+5.25%). Gold increased 0.2% to $2,673/oz, and Brent crude surpassed $77.00/bbl.

Some encouraging news for Mortgage holders, with ANZ joining Westpac in bringing forward their expectations for the first rate cut to February 2025 from their previous May forecast. Markets are now pricing in a 78% probability of the Reserve Bank of Australia reducing rates to 4.10% at its February meeting.

U.S. markets were closed overnight in observance of former President Jimmy Carter's passing on December 29, 2024. Futures markets indicate a lower opening for Friday’s session as investors eye employment data that could shape expectations for inflation and Federal Reserve policy decisions.

Global bond markets continued to face pressure, particularly in the United Kingdom, where government bond yields reached levels not seen in over a decade. The UK's 10-year gilt yields touched 4.93% before settling at 4.84%, while 30-year yields peaked at 5.47%, reflecting deep-seated concerns about economic stagnation and fiscal management.

Company News

• Insignia Financial (+1.98%) responded to media speculation in The Australian about a potential Brookfield takeover bid, confirming that it has not received any proposal from Brookfield.

• Light & Wonder (-0.08%) has appointed Simon Johnson as CEO of its iGaming division. Johnson has been with the company since 2017 and was previously Senior Vice President and International Managing Director of the Gaming business.

• Novonix (-2.06%) has secured a licensing agreement with Harper International, gaining rights to use and develop Harper's continuous graphitisation furnace technology, which is crucial for producing synthetic graphite anode material for lithium-ion batteries.

• Star Entertainment (-15.39%) shares dropped again after plunging 31% on Thursday, as lenders warned the casino operator could face voluntary administration within months unless a rescue deal emerges.

Economic Data

• Euro Retail Sales were up 0.1% month-over-month in November 2024, less than market expectations of a 0.4% increase after a 0.3% fall in October.

• U.S. Employers announced 38,792 job cuts in December 2024, the least in five months, down from 57,727 in November and 34,817 a year earlier.

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🌎️ Around The Globe

• Australian retail sales rose 3% to $36.51 billion in November, driven by widespread Black Friday promotions across all sectors. Other retail led with 7% growth, followed by hospitality at 3.6% and food at 2.8%.

• Bhutan's Gelephu Mindfulness City announced plans to include digital assets in its strategic reserves, with current holdings including $1.1 billion in Bitcoin (11,688 BTC) and $2.18 million in Ethereum.

• ByteDance is actively promoting its alternative app, Lemon8, to U.S. users as TikTok faces potential bans. The company is using sponsored content on TikTok to encourage users to transfer their content and following to Lemon8, which currently has over one million daily users.

• The European Commission has disputed Meta CEO Mark Zuckerberg's claims that EU laws censor social media, clarifying that regulations only require the removal of illegal content. This comes as Meta discontinued its U.S. fact-checking programs.

• Novo Nordisk and Valo Health are expanding their AI-focused partnership to develop new cardiometabolic treatments.

• Nvidia CEO Jensen Huang dampened enthusiasm for quantum computing by stating that "very useful quantum computers" are likely two decades away, causing quantum computing company stocks to decline.

• Rolex watch prices are climbing, with gold models up 14% while steel versions rose 3%, primarily driven by the 27% increase in gold prices, hitting as high as $2,640/oz by end-2024.

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*1-year, 3-year and 5-year returns are calculated as of November 30 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.