Market Recap: Woolworths and Coles Escape Gouging Claims

Good Evening,

Welcome to Equity Espresso’s Daily Market Recap. Last night’s newsletter was a late-night special…..but we’re back in prime time. Today, Coles and Woolworths escaped price gouging accusations, Donald Trump wants to bring mining back to the USA, and Uranium stocks continue to charge (unless you’re Paladin.) Let’s jump in.

Market Wrap

Markets finished higher today, making it five positive sessions in the last six, with the S&P/ASX 200 index rising 13.2 pts. (+0.17%) to finish at 7,932.1. The major index broke a four-week losing streak, closing 1.83% higher, recording the highest one-week gain since late December!

An even day on the board with six sectors finishing the day higher, but it was all about Consumer Staples (+3.91%) stocks, led higher by the supermarket cartel of Woolworths Group (+5.97%), Coles (+4.85%) and Metcash (+3.25%). These companies rose after the ACCC released its 441-page report on the sector, which the federal government commissioned. The investigation found no evidence of alleged price gouging and did not recommend divestment actions. The report offered 20 recommendations in the sector, mainly regarding improved price visibility. Check out the ‘Top Story’ section later in the newsletter to get the full rundown.

Some of the other best-performing sectors were Industrials (+1.15%) and Utilities (+0.66%), while Healthcare (-0.73%) and Technology (-0.68%) fell by the most.

In the U.S., President Donald Trump invoked emergency powers to boost the country's production of critical minerals and reduce its reliance on foreign sources. The executive order targets rare earth minerals, uranium, copper, potash, and gold. The president emphasised that relying on foreign countries, particularly China, for critical mineral supplies creates national security risks and economic vulnerabilities.

Gold prices fell to around $3,030/oz on Friday but are still on track for a third weekly gain. Copper prices rose again to trade just under $5.10/lbs.

In company news, Premier Investments (+3.85%) reported a fall in sales of 2.5% in the six months ending January 2025 to $857.8 million, which was in line with estimates, attributing the fall to a challenging general discretionary retail environment. Boss Energy (+6.67%) rose again, making it eight straight days in the green. The #1 shorted stock on the ASX (as of March 17) could potentially be benefitting from a ‘short squeeze.’ One to keep an eye on. Deep Yellow (+2.72%) and Bannerman Energy (+4.56%) also saw gains, while Paladin Energy (-3.95%) fell after it had to temporarily suspend operations at its Langer Heinrich mine due to unseasonal heavy rains in Namibia.

Outlook

U.S. Futures markets are trading fairly flat this afternoon, the S&P 500 (-0.04%) and NASDAQ (-0.05%) marginally lower.

Wall Street

U.S. stocks closed slightly lower on Thursday, with the Dow falling 0.03%, the S&P 500 dropping 0.22% and the Nasdaq declining 0.33%. The markets fluctuated between gains and losses as investors weighed the Federal Reserve's unchanged interest rate decision against the Trump administration's concerns about reciprocal trade tariffs. Technology (-0.49%) stocks were among the weakest performers, having the biggest negative impact on the market. In comparison, Energy (+0.41%) stocks advanced as crude prices rose nearly 2% following new U.S. sanctions related to Iran.

Recent economic data has created mixed signals. Weekly jobless claims increased slightly, suggesting the economy and consumer sentiment may be cooling. The Fed indicated two quarter-point interest rate cuts were likely later this year, maintaining its forecast from three months ago. According to LSEG data, market participants are currently pricing in 63 basis points of cuts this year, with a 71% probability of at least a 25-basis-point cut at the June meeting. 

Accenture (-7.3%) shares fell after the consulting firm reported during its second-quarter earnings call that it had lost federal government contracts due to tighter spending under the Trump administration. The company posted earnings of $2.82 per share on revenue of $16.66 billion, slightly above analyst expectations of $2.81 per share on revenue of $16.62 billion.

FedEx reported third-quarter adjusted earnings of $4.51 per share, missing analyst forecasts, while revenue slightly exceeded expectations at $22.16 billion. The company lowered its full-year guidance for the third consecutive quarter amid economic uncertainty and weak demand. Nike exceeded Wall Street's expectations for its holiday quarter with earnings per share of 54 cents vs. the estimated 29 cents, despite overall sales dropping 9% to $11.27 billion. The company's net income for the quarter ending February 28 was $794 million, down from $1.17 billion a year earlier. Sales weakness was particularly pronounced in China, where revenue fell 17% to $1.73 billion, missing expectations of $1.84 billion.

Economic Data

• The Bank of England voted 8-1 to keep the Bank Rate unchanged at 4.5% during its March meeting.

• Japan's Inflation rate decreased to 3.70% in February from 4.00% in January of 2025. Core inflation was at 3%, lower than January’s figure of 3.2%.

• U.S. Existing Home Sales rose by 4.2% from the previous month to a seasonally adjusted annualised rate of 4.26 million homes in February of 2025, rebounding a 4.7% drop in the previous month and firmly above market expectations.

• U.S. Initial Jobless Claims rose by 2,000 to 223,000 in the second week of March, marginally below market expectations of 224,000

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Company Spotlight

❗️ASX Company Announcements

A snapshot of some of the companies out with news today

• Capstone Copper will issue $500 million in senior unsecured bonds set to expire in 2033 to eliminate its subsidiary Monteverde's project financing debt and reduce its overall debt.

• Nine Entertainment has confirmed that it has started negotiations to sell its controlling stake in Domain to U.S. real estate conglomerate CoStar. Last month, CoStar acquired a 16.9% stake in Domain, after which the U.S. company made a cash offer of $4.20 per share for the remainder of the company.

• Premier Investments reported a 12.8% decline in interim profit from continuing operations, falling to $148.8 million. Sales from continuing operations decreased by 1.8% to $455 million, with mixed performance across brands. Peter Alexander achieved record sales of $297.7 million, while Smiggle experienced a significant 14.5% drop to $157.3 million.

• Emerald Resources says that output from its Okvau Gold Mine will fall short of guidance in the March quarter, expected to produce 20,000/oz against the forecasted range of 25,000 to 30,000/oz.

• Paladin Energy has temporarily closed its Langer Heinrich Mine in Namibia owing to heavy rains impacting access to the site.

• Latitude Group reported a 139% increase in full-year cash profit for 2024, with net cash profit reaching $65.9 million. The digital payments provider and lender achieved a statutory profit of $30.6 million, a significant turnaround from the previous year's $102.7 million loss. This strong performance was driven by renewed consumer demand for credit and improved economic conditions.

Top Story

ACCC Hands Down 20 Recommendations in Supermarket Inquiry

The Australian Competition and Consumer Commission (ACCC) has released its findings after a year-long investigation into the supermarket industry. The commission recommends that major chains be forced to publish all their prices online to increase transparency for customers.

Despite concerns raised by the Coalition and the Greens, the consumer watchdog found no clear evidence of price gouging. However, it noted that Woolworths and Coles are among the most profitable supermarket retailers globally.

The Inquiry

The investigation focused on Woolworths, Coles, Aldi and other retailers following numerous consumer complaints about rising grocery prices. The ACCC's 441-page report examined pricing practices, profit margins and market dominance.

The competition regulator found that grocery prices have risen 24% over the past five years, which is comparable to the 22% increase in other goods and services and lower than supermarket price increases in most other developed economies.

Market Dominance

Woolworths controls 38% of national supermarket sales, Coles holds 29%, Aldi accounts for 9%, and Metcash (IGA) has 7%.

The ACCC concluded that Woolworths and Coles "have limited incentive to compete vigorously with each other on price" and haven't seen evidence of them "seeking to substantially discount prices below each other in aggregate."

Price Increases

While the price of everyday items has surged since 2019, the regulator noted that overall grocery inflation in Australia has been lower than in comparable countries.

ACCC Deputy Chairman Mick Keogh stated that determining whether excessive prices are being charged is "a very complex task" but acknowledged the major retailers "have some power with pricing in the marketplace."

Recommendations

The ACCC's report included 20 recommendations to improve competition and transparency in the supermarket sector. Key recommendations include:

• Forcing large supermarkets to publish all their product prices online and via application programming interfaces for third parties to access.

• Provide clearer information about discount promotions by showing consumers the percentage discount, the original price, and the date range of previous pricing.

• For farmers and suppliers, provide detailed information about supply forecasts and greater transparency in weekly tendering processes.

• Publish notifications when package size changes occur in a manner adverse to consumers.

• Supermarkets should not be permitted to unilaterally reduce wholesale fresh produce prices or volumes agreed with suppliers except in force majeure events.

• Government support for community-owned stores in remote areas and changes to planning and zoning laws to reduce barriers for competitors.

Headlines

🦘 Local News

• According to Australia Post's 2025 Annual eCommerce Report, Australians spent a record $69 billion on online goods last year, a 12% increase from the previous year. The report found that 9.8 million Australian households made online purchases, with the highest spending categories being online marketplaces (nearly $16 billion), food and liquor ($13.6 billion), and fashion and apparel ($9.6 billion).

🌎️ Around The Globe

• Apple TV+ is the only unprofitable subscription service in Apple's lineup. Since its 2019 launch, it has suffered losses exceeding $1 billion annually despite attracting approximately 45 million subscribers.

• DoorDash has partnered with Klarna, marking the delivery services first buy now, pay later (BNPL) alliance in the U.S. and offering customers a new payment option for meals and products.

• The European Union has postponed its first round of retaliatory tariffs on US goods until mid-April, extending the original April 1 implementation date to allow more time for discussions with Washington.

• Greenpeace has been ordered to pay approximately US$660 million in damages after a jury found the environmental group defamed Texas-based Energy Transfer.

• Kraken, one of the world's largest cryptocurrency exchanges, said it would buy retail futures trading platform NinjaTrader for $1.5 billion.

• ​Tesla is recalling ~46,000 Cybertrucks due to a safety issue with stainless-steel exterior trim panels that could detach while driving, creating a potential hazard.

🤖 All About AI

• CoreWeave is seeking a valuation of up to $32 billion in a U.S. initial public offering, leveraging its Nvidia backing and the strong demand for generative AI.

• Nvidia plans to invest hundreds of billions of dollars in US-based chip and electronics manufacturing over the next four years to mitigate risks from potential tariffs.

Brokers

📊 Broker Deep Dive

Shaw & Partners has reiterated its BUY rating on Helloworld Travel (ASX: HLO) with an unchanged price target of $2.70 per share, highlighting that the stock trades at a significant discount to this target and its ASX-listed peers. The analyst notes that HLO offers attractive value, trading on an FY26 PER of 8.2x with a fully franked dividend yield of 6.0%.

Recent Australian Bureau of Statistics data for January 2025 support a positive outlook for the travel sector. Total arrivals increased 12.3% year-on-year to 2,383,330, and departures increased 16.3% to 2,031,060. The seven-month figures for January 2025 show that arrivals and departures have now exceeded pre-COVID FY19 levels.

The broker maintains its FY25 underlying EBITDA forecast of $58.0 million for HLO, which sits within the company's guidance range of $56-62 million and slightly above the FactSet consensus of $56.2 million.

You can access the report below:

Daily Broker Moves

• Morgans has upgraded Judo Capital to Add from Hold, maintaining a $2.08 price target. The broker cites a buying opportunity created by recent banking sector weakness and a block trade sale in which two pre-IPO investors sold 9.9% of shares at $1.74 (6% below the previous closing price). The broker notes that Judo does not pay dividends; instead, it uses excess capital to fund loan growth, which means investors rely on capital returns and face a higher risk than major banks.

Markets

Commodity Prices

Bonds

Forex

Global Health Check

A Little Extra

 ⬇️ Short Data

Top 10 shorted stocks on the ASX - as of March 17

The Insiders

Director buying and selling.
On-market and Off-market trades only.
Net Buy/Sell positions from February 27 - March 20

💵 Dividends

Companies who traded ex-divided today

1. Latitude Group Holdings

2. Vita Life Sciences

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.