Trump Talks Tariffs: China's Pain & Uranium's Gain

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Welcome to Equity Espresso’s Market Recap.

The Australian share market advanced 0.3% on Wednesday, with the S&P/ASX 200 Index rising 27.4 points to 8,429.8, led by gains in seven out of eleven sectors. The All Ordinaries posted similar gains in a session dominated by technology stocks.

The Technology (+2.35%) sector performed best, with Life 360 (+3.40%) continuing its recent positive momentum, while Wisetech Global (+2.93%) and Xero (+2.44%) also climbed. The Tech. sector got a boost in the U.S. intensified after President Trump announced a multi-billion dollar joint venture to boost AI infrastructure development.

Mining (-0.94%) stocks declined amid reports that the White House is considering 10% tariffs on Chinese imports, with BHP Group falling 2.00% and Fortescue dropping 1.76%. The news also impacted Chinese markets, sending the Shanghai Composite down 1.03%.

Uranium stocks got a healthy lift after U.S. President Trump indicated he would impose tariffs on Canada - the largest foreign supplier of Uranium to the United States. Boss Energy (+14.18%) was the best performer in the sector, while Paladin Energy (+10.06%) also climbed.

Company News

• Bubs Australia (+22.45%) shares surged after reporting a financial turnaround, with first-half EBITDA reaching $2.9 million compared to a $6.8 million loss last year. The company maintained its FY25 revenue guidance of $102 million.

• Evolution Mining (+4.06%) anticipates a 25,000-ounce production drop in the March quarter due to a 28-day shutdown at Cowal and maintenance at Ernest Henry. While the December quarter's gold output rose slightly to 194,793 ounces, the company maintains its annual guidance of 710,000-780,000 gold ounces.

• Iluka Resources (-6.95%) posted a 23.7% increase in December quarter output to 129,400 tonnes, surpassing its full-year guidance despite annual production falling to 496,200 tonnes from 639,200 tonnes. The strong performance was attributed to increased zircon-in-concentrate and improved synthetic rutile production.

• Paladin Energy (+10.06%) reported a decline in December quarter production at its Langer Heinrich Mine, with uranium oxide output slightly lower at 638,409 pounds compared to 639,679 previously. Despite the dip, the company maintained its FY25 guidance of 3-3.6 million pounds.

• Regal Partners (+0.80%) reported a 63.7% surge in funds under management to $18 billion in 2024, up from $11 billion, driven by strong performance across its investment strategies and $1.1 billion in net inflows.

• West African Resources (+1.66%) reported December quarter gold production of 51,178 ounces, up from 47,799 in September, meeting its annual target of 206,622 ounces at $US1,240 per ounce.

• Woodside Energy (-1.87%) shares fell despite reporting a record 2024 production of 194 million barrels of oil equivalent. While Sangomar achieved 95% reliability and Mad Dog delivered strong results, quarterly output dropped 3% due to seasonal demand as the company progressed with its Scarborough project.

Wall Street

The Dow Jones was the big mover on Wall Street, climbing 1.24%, while the S&P 500 (+0.88) and Nasdaq (+0.64%) made solid gains as investors reacted positively to President Trump's initial restraint on implementing previously threatened blanket tariff increases. The small-cap Russell 2000 (+1.85%) index outperformed the larger indexes, while Industrials (+2.03%) led sector gains. Energy (-0.64%) was the only negative sector during the session.

Nuclear power stocks lifted the Utilities (+1.55%) sector following Trump's orders to boost energy production, with notable gains from Vistra Corp (+8.48%), NRG Energy (+6.74%), and Constellation Energy (+2.30%).

Apple (-3.19%) shares fell following a broker downgrade, with Jefferies cutting its rating to underperform, citing concerns about the company's AI prospects and potential revenue miss in upcoming Q1 results. 3M (+4.16%) shares jumped after exceeding fourth-quarter expectations, with adjusted earnings of $1.68 per share and revenue of $5.81 billion beating estimates. Strong holiday sales of industrial adhesives, tapes, and electronics drove the better-than-expected performance.

S&P500 Sector Performance

Economic Data

• Canada’s Annual Inflation rate eased to 1.8% in December of 2024 from 1.9% in November, slightly below market expectations that it would remain at 1.9%.

• Malaysia's Annual Inflation rate was 1.7% in December 2024, slightly below market consensus and November's print of 1.8%

• New Zealand’s Annual Inflation eased to 2.2% in the December quarter, matching the rate from the prior quarter. This marks the lowest inflation rate since March 2021, although it exceeded market expectations of 2.1%.

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🌎️ Around The Globe

• Amazon has suspended its drone delivery operations in Texas and Arizona following crashes of two aircraft during rainy conditions at a test site, dealing another setback to its decade-long ambition of achieving 30-minute product delivery by air.

• Belgium has launched an investigation into Apple over allegations it purchased "blood minerals" from illegal mines in the Democratic Republic of Congo. The probe follows December complaints about Apple subsidiaries allegedly sourcing minerals linked to conflict, child labour, and environmental damage.

• Costco Teamsters union, representing 18,000 employees nationwide, voted to authorise a strike with 85% approval if a new contract isn't reached by January 31. Union president Sean O'Brien warned Costco executives to "do the right thing" before the current agreement expires.

• Instagram is offering TikTok creators monthly payments between $10,000 and $50,000 to post Reels exclusively on their platform first. Despite introducing new features and increased payouts, creators remain sceptical due to Meta's history of inconsistent incentive programs.

• President Trump initiated significant changes to federal workforce policies, mandating five-day office attendance and reducing civil servant protections. The orders aim to end remote work arrangements from the COVID era and could potentially weaken legal safeguards protecting mid-level officials from political removals.

• TikTok received a 75-day reprieve from its planned January 19 shutdown after President Trump signed an executive order Monday while suggesting the U.S. government should receive half ownership of TikTok's U.S. operations and threatening Chinese tariffs if Beijing blocks the deal.

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

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