Market Recap: Jobs Drop While Rate Cut Odds Jump

Good Evening,

Welcome to Equity Espresso’s Daily Market Recap. Earnings, acquisitions and falling jobs were in the headlines today. A certain t word is back in the lexicon (and it’s not tariffs) while gold continues to shine. Dont forget to let us know your thoughts about today’s newsletter in our daily poll at the bottom of the newsletter. Let’s jump in

Market Wrap

Markets recorded their best day since February 6, buoyed by a weaker-than-expected February employment report showing a 53,000 drop in jobs. The S&P/ASX 200 index gained 90.6 points (+1.16%) to close at 7,918.9. This surprise employment decline strengthened rate cut expectations, with money markets now pricing in a 78% probability of a May RBA reduction, up from 66% previously.

Technology (+2.42%) stocks topped the session, with widespread gains driven by Life 360 (+2.89%), NextDC (+2.96%), and Technology One (+2.96%). The Real Estate (+2.06%) and Financials (+1.86%) sectors also saw strong gains.

Gold prices continued their upward momentum, trading at around US$3,050/oz, hitting a new record high. Copper futures surged past US$5.00/lbs, reaching a ten-month high as the spot market continued to reflect supply tightness.

Uranium prices are up over 2.0% in the last week, bouncing off 18-month lows. Boss Energy (+7.43%) was a big mover today and is up over 20% in the last week. Boss Energy has been the most shorted stock on the ASX this year, with the recent excessive share price rise likely resulting from a ‘short squeeze’. Deep Yellow (+4.76%) and Lotus Resources (+8.11%) were two big movers.

It was a busy day for ASX Company News, with Sigma Healthcare, Brickworks and Washington H Soul Patts. all out with earning reports. TPG Telecom got the green light from the ACCC to proceed with its $5.25 billion sale of fibre networks to Vocus. While Cleanaway Waste Mgmt. announced a $377 million acquisition.

Get all the day's ASX company news in our dedicated ASX Company section.

Australia's unemployment rate remained steady at 4.1% in February, despite employment falling by 53,000 people and the number of unemployed decreasing by 11,000, according to the Australian Bureau of Statistics (ABS). The employment decline was primarily due to fewer older workers returning to work, contrasting with continued employment growth among people aged 15-54. The ABS said that despite February's employment drop, the overall job market remains strong, with employment still approximately 266,000 people (1.9%) higher than the previous February, close to the 20-year pre-pandemic average growth rate of 2.0%.

Outlook

Wall Street futures for Thursday are positive for the Nasdaq (+0.63%) and S&P 500 (+0.46%). The Bank of England meets tonight and is expected to keep interest rates on hold at 4.50%. The U.S. reports weekly jobless claims, March Manufacturing data, and February home sales.

Wall Street

U.S. markets bounced back strongly today, with all major indices erasing yesterday's losses. The S&P 500 rose 1.1%, the Nasdaq gained 1.2%, and the Russell 2000 jumped 1.6%. All eleven S&P 500 sectors finished positively, with Consumer Discretionary (+1.90%) stocks leading the gains. These gains put the S&P 500 back at the upper end of this week's trading range. Treasury yields moved lower, with the 10-year yield settling at 4.25%.

As widely expected, the Federal Reserve kept interest rates steady at 4.25% to 4.5%, while maintaining its forecast for two interest rate cuts later this year. In his press conference, Fed Chair Jerome Powell noted that "the economy is strong overall" with "solid" labour market conditions, though he acknowledged that inflation "remains somewhat elevated" despite moving closer to the 2% target.

The Fed's latest economic projections showed expectations for higher inflation and lower economic growth than previously forecast. Powell specifically mentioned that a "good part" of the higher inflation expectation stems from potential tariff impacts. “It can be the case that it’s appropriate sometimes to look through inflation if it’s going to go away quickly, without action by us, if it’s transitory,” Powell said.

Boeing (+6.9%) shares jumped after CFO Brian West's positive remarks at an investor conference. He reported easing cash burn this quarter and factory improvements. West downplayed concerns about Trump's tariffs, though noted their impact would depend on how long the uncertainty continues. Gilead Sciences (-2.47%) shares dropped following a Wall Street Journal report that the Health and Human Services Department may significantly reduce federal funding for domestic HIV prevention.

Economic Data

• Australia’s unemployment rate was 4.1% in February, which was unchanged from January and in line with expectations.

• Australian Employment fell by 52.8k in February, missing market estimates of a 30 thousand gain and marking the first drop since March 2024

• Euro Area inflation decreased to 2.30% in February from 2.50% in January of 2025. Core inflation rose 2.6%, in line with expectations, down from 2.7% in January.

• The U.S. Federal Reserve kept the federal funds rate unchanged at 4.25%-4.5% during its March 2025 meeting, extending the pause in its rate-cut cycle that began in January, in line with expectations.

• New Zealand GDP expanded by 0.70% in Q4 of 2024 from the previous quarter.

Company Spotlight

❗️ASX Company Announcements

A snapshot of some of the companies out with news today

• Nanosonics has received De Novo clearance from the U.S. Food and Drug Administration (FDA) for its innovative CORIS® system, a cleaning tool designed to clean endoscopes used in hospitals and reduce infection risk.

• Imricor Medical Systems has secured $70.0 million from investors, issuing 49,645,392 new CDIs at $1.41 per share. The proceeds from the placement will accelerate Imricor’s growth strategy.

• TPG Telecom has received approval from Australia's competition watchdog to proceed with its $5.25 billion sale of fibre networks to the Vocus Group. ACCC Commissioner Dr. Philip Williams noted that while Vocus primarily serves corporate and government customers, TPG focuses on smaller and medium-sized businesses.

• NRW Holdings has secured a $100 million, 12-month contract for procurement and construction works at Rio Tinto's Dampier-based seawater desalination project. The scope includes work on the site's seawater intake, treatment facility, and conveyance piping systems.

• Cleanaway Waste Management will acquire Contract Resources for $377 million to expand its DD&R services. Contract Resources provides technical services to the oil and gas industry. Its forecast 2025 earnings are $52 million.

• Arafura Rare Earths has signed a five-year distribution agreement with Luxembourg-based mining group Traxys Europe to supply 100 tonnes of neodymium-praseodymium oxide annually from its Nolans project.

• Playside Studios has announced a leadership change with Benn Skender appointed as CEO, while founder Gerry Sakkas will transition to the newly created role of Creative Director.

• Ampol's subsidiary Z Energy has sold its 12.7% stake in New Zealand-listed Channel Infrastructure for NZ$95 million, which is necessary to maintain an efficient capital structure.

• Brickworks posted a net profit of $21.3 million, recovering from last year's $52 million loss caused by one-off costs. The company increased its interim dividend to 25¢ per share, up from 24¢ last year. However, its core Australian building products division saw EBITDA decline by 4% to $50 million. Brickworks says home-building activity in Australia is subdued, and timelines for getting construction approvals are blowing out.

• Judo Capital fell after Bain Capital and Singapore’s GIC sold a combined 9.8% stake in the company in a $191 million block trade after the market closed yesterday.

• Sigma Healthcare reported a $13.8 million statutory net loss for its final year as a standalone business before merging with Chemist Warehouse, compared to a $4.5 million profit the previous year. Despite revenue jumping 46% to $4.8 billion, EBIT declined 6.7% to $21.7 million.

• Washington H. Soul Pattinson Group has increased its interim dividend by 10% to 44¢ after reporting an 18% year-on-year profit jump. The investment company's net profit rose to $284.8 million, driven by better operating results from strategic investments and higher cash from its credit portfolio. The company also reported a 9.9% growth in cash flow.

Headlines

🦘 Local News

• Prime Minister Anthony Albanese will pledge to cap Pharmaceutical Benefits Scheme prescriptions at $25, representing a 20% reduction in maximum medicine costs. This policy would save Australians around $200 million annually. Opposition Leader Peter Dutton has promised to match Labor’s pledge.

• Australia and Canada have signed a $6.5 billion defence deal for Australia to develop a long-range surveillance radar system for North America and Arctic tracking. Defence Minister Richard Marles called it Australia's "biggest defence industry export" ever.

🌎️ Around The Globe

• China has lifted its two-year ban on poultry imports from Argentina, reopening an important supply channel amid escalating trade tensions with the United States that have resulted in high tariffs on U.S. poultry.

• European regulators have charged Alphabet with breaching the Digital Markets Act through its Google Search and Play products. The European Commission claims Google Search engages in prohibited "self-preferencing" by giving Alphabet's own services favourable treatment over competitors.

• The E.U. will reduce steel import quotas by 15% from 1 April to prevent cheap steel from flooding the European market following Donald Trump's new tariffs. This protective measure comes after the US imposed a 25% tariff on steel and aluminium, pushing exporters from Canada, India, and China to seek alternative markets.

• Morgan Stanley will cut 2,000 jobs this month in its first major layoffs under new CEO Ted Pick, who took over in January 2024. The bank cited performance issues and cost reduction as reasons for the cuts, and it plans to replace many positions with AI and automation solutions.

• Pfizer has sold its 7.3% stake in consumer health company Haleon for approximately £2.5 billion.

🤖 All About AI

• Nvidia and xAI have joined the A.I. Infrastructure Partnership, a consortium backed by Microsoft, MGX, and BlackRock. Originally formed last year with a $30 billion investment to build data centres supporting A.I. applications, the partnership represents growing efforts to expand A.I. infrastructure across the U.S.

• Disney will be the first to implement Newton, a new physics engine developed through a partnership between Nvidia, Disney Research, and Google DeepMind. Unveiled by Nvidia CEO Jensen Huang at GTC 2025, Newton simulates robotic movements in real-world environments.

Brokers

📊 Broker Deep Dive

PAC Partners sees EQ Resources (ASX: EQR) as a significant emerging player in Australia's tungsten mining industry, highlighting the company's potential to become a key domestic producer of this critical metal. Tungsten is a rare, hard, steel-grey metal with the highest melting point of any pure metal.

The broker notes EQ Resources' strategic advantage with its Mt Carbine project in Queensland, which combines existing production with substantial expansion opportunities. EQ Resources is well-positioned to benefit from the growing global demand for tungsten, particularly as Western nations seek to reduce dependency on Chinese supply.

The broker views EQ Resources' management team as highly experienced in the specialty metals sector, with a clear pathway to increased production volumes and improved operational efficiency. PAC Partners believes the current share price significantly undervalues the company's near-term production growth potential and its strategic importance in the critical minerals supply chain.

You can access the report below:

Daily Broker Moves

1. Macquarie has upgraded Codan to Outperform from Neutral following solid 1H25 results, which demonstrated communications remains the company's key growth driver. The broker believes market concerns about Ukraine's negative impact are exaggerated and expects Codan to benefit when the conflict ends. The target price was slightly reduced to $17.00 from $17.13 due to minor working capital revisions.

2. Ord Minnett has upgraded Challenger to Buy from Hold, raising its price target to $7.00 from $6.65 following APRA's review of illiquidity premiums. The broker notes this regulatory change will likely reduce capital requirements for annuity providers, potentially enabling Challenger to implement an estimated $500m share buyback that would be 7% accretive. The broker justifies its higher price target based on expectations of reduced capital volatility for the company.

3. Morgans notes that while Webjet Group has reiterated its FY25 guidance, the company has repositioned FY26 as an investment year rather than a period of accelerated growth. Management unveiled an ambitious 5-year growth strategy targeting a doubling of total transaction value by FY30, exceeding current consensus expectations.

4. Morgan Stanley has recalibrated its bank stock rankings, now placing ANZ Bank (ANZ) as its top pick with an Equal-weight rating, followed by National Australia Bank, which has been downgraded from Overweight to Equal-weight. Morgan Stanley cites increased execution risks stemming from management changes, intensifying competition in business banking, putting pressure on margins, shifts in deposit mix, and below-industry growth in mortgages. Following this reassessment, the broker has reduced National Australia Bank's target price to $34.80 from $37.40.

We’ve updated broker reports for Gold Road Resources and Hew Hope Corporation.

Broker Forecasts

1. Goldman Sachs has lowered its Brent crude forecast range by $5 to $65-80 per barrel, citing tariff escalation and high spare capacity as downside risks to oil prices.

Markets

Commodity Prices

Bonds

Forex

Global Health Check

A Little Extra

 ⬇️ Short Data

Top 10 shorted stocks on the ASX - as of March 14

The Insiders

Director buying and selling.
On-market and Off-market trades only.
Net Buy/Sell positions from February 27 - March 18

💵 Dividends

Companies who traded ex-divided today

1. Cochlear

2. The a2 Milk Company

3. Service Stream

4. Spark New Zealand

5. Early pay

6. K & S Corporation

7. Tourism Holdings Rentals

8. Kelsian Group

The Last Word

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 own research before making any investment.