Good Evening,

Welcome to Equity Espresso’s Daily Market Recap. Markets took a nosedive ahead of "Liberation Day" tariffs, with mining stocks getting bulldozed like sandcastles at high tide while gold prices kept climbing to heights. Thanks to everyone who has taken advantage of our pre-launch deal and signed up for our pro-subscription. We appreciate the support! For those yet to make the plunge, sign up before midnight tonight to save 50% with our $60/year deal. Let’s jump in.

Local Market

Markets sold off heavily today, following global trends, as investors cashed up ahead of "Liberation Day"—when the U.S. is set to announce new tariffs. The current pattern suggests markets are "selling the rumour," and we can only hope they'll "buy the fact" after Wednesday. Regardless, we should prepare for a volatile week ahead.

The S&P/ASX 200 index finished Monday’s session a whopping 138.6 pts. (-1.74%) lower to end at 7,843.40, with all 11 sectors finishing down more than 1%, led by Materials (-3.35%) and Energy (-2.68%).

Mining companies were hit hardest after the release of quarterly figures from the Department of Industry, Science and Resources, which predicted that Australian commodity exports would fall by almost 7% this year. Rio Tinto (-4.76%), BHP Group (-3.75%), and Fortescue (-4.00%) all saw sharp falls.

Gold prices show no signs of weakening, with the commodity climbing past US$3,110, hitting new all-time highs. It did little to help our gold mining sector, with Evolution Mining (-1.25%), Capricorn Metals (-0.86%) and Ramelius Resources (-4.05%) all declining. Meanwhile, RBC Capital and Goldman Sachs have raised their 2025 & 2026 gold price forecasts. For more insights, see today's deep dive examining the commodity cycle, focusing on gold, copper, uranium, and lithium.

Beyond Tariff Wednesday, this week's key economic event is tomorrow's Reserve Bank of Australia announcement, with traders assigning a 92% probability that the cash rate will hold at 4.10% following last month's 25bps cut.

Economic Data

• Australian Housing Credit rose by 0.40% in February from the prior month, representing the total value of housing loans.

• Australia's Private Sector Credit rose by 0.50% in February from the prior month, representing the total amount of credit extended to the private sector.

• China's official NBS Manufacturing PMI rose to 50.5 in March 2025, from 50.2 in the previous month, in line with market expectations.

• The Eurozone’s Economic Sentiment Indicator fell to 95.2 in March 2025, the lowest level in three months, compared to 96.3 in February and well below forecasts of 97.

• U.S. Personal Consumption Expenditure (PCE) prices increased by 0.3% month-over-month in February 2025, maintaining the same pace as the previous two months and in line with expectations.

Outlook

U.S. futures are showing lots of red this afternoon, with both the NASDAQ (-1.11%) and S&P 500 (-0.66%) both down, indicating a sharp fall at the market open.
Some of the key economic news to watch for tomorrow (day references local time)

Monday

• United States: Chicago PMI (Mar)

Tuesday

• Australia: Retail Sales (Feb), RBA Interest Rate Decision (Apr)

• China: Caixin Manufacturing PMI (Mar)

• Eurozone: CPI (Mar), Unemployment Rate (Mar), Manufacturing PMI (Mar)

• United Kingdom: Manufacturing PMI (Mar), House Price Index (Mar)

• United States: Nonfarm Employment (Mar), ISM Manufacturing Prices (Mar)

🚨Final Call

This is It – Last Chance to Lock in Your Pro Deal

By this time tomorrow, Equity Espresso will be Pro. 

That means you will need to be a paid subscriber to view content from this part of the newsletter onwards.

Save 50% by signing up to our $60/year deal now.

Or, test the waters by signing up for $14/month. Cancel anytime.

Global Markets (Pro)

Market Recap

U.S. markets plunged on Friday, capping a rough week as tariff concerns and tech selloffs dominated sentiment. The S&P 500 (-1.97%) tumbled, while the Nasdaq (-2.70%) fell and the Dow Jones (-1.69%) dropped.

Tech heavyweights bore the brunt of the selloff, with Amazon (-4.3%), Microsoft (-3.0%) and Apple (-2.7%) all sliding. Tesla (-3.5%) shares slumped amid analyst warnings about tariff vulnerability ahead of expected weak Q1 delivery results.

Lululemon (-14.2%) shares fell after the athletic apparel retailer issued disappointing 2025 guidance despite beating Q4 earnings ($6.14 vs $5.85) and revenue ($3.61B vs $3.57B) expectations. CEO McDonald cited declining U.S. store traffic amid economic uncertainty but expects minimal impact from Trump's tariffs.

European markets retreated on Friday as the Stoxx Europe 600 Index (-0.77%) closed lower, marking its third weekly decline this month with a 1.4% loss. Defensive sectors like real estate and utilities showed relative strength. Meanwhile, cyclical shares bore the brunt of selling pressure, with travel stocks, miners, banks and industrials leading declines. Among notable movers, Ubisoft (-1.82%) initially surged on news of Tencent's €1.16 billion investment in a planned spinoff unit before surrendering those gains, while Puma (-4.4%) slid following competitor Lululemon's cautious consumer spending outlook.

The Shanghai Composite fell 0.2% to below 3,345 on Monday, extending losses from the previous session. The Nikkei 225 Index tumbled nearly 4%, falling below 36,000 to its lowest level in six months, as investors reacted to weakness on Wall Street and brace for new U.S. tariffs set to take effect this week.

Global Indices

Watchlist (Pro)

🔍️ Stock Watch

A list of companies we’re watching at the moment

Alphabet is starting to look attractive from a valuation perspective. It is expected to grow revenue and earnings by over 10% p.a. in the coming 3 years and is trading at an NTM P/E of 17x; its 10-year average is 23.8x. Sentiment is low on Alphabet with the below search is or will be displaced by LLMs like Chat GPT. Similarly, Meta is looking “cheap” compared to historic valuations.

Data Centre Companies: Some of 2024’s best performers in the data centre space are off to a slow start this year. Goodman Group, Next DC, Macquarie Technology, and Megaport fell sharply in the last month due to fears of an oversupply in the market. Microsoft has cancelled data centre projects worth approximately 2 gigawatts in the U.S. and Europe over the past six months, citing an oversupply relative to its demand forecast. Alibaba Group's chairman, Joe Tsai, has warned of a potential bubble in data centre construction, suggesting that investments may be outpacing current demand for A.I. service. A watch on this sector as sentiment appears to be turning unfavourable.

Australian Vintage is a micro-cap with a $36m market cap that we stumbled across in our Directors Transaction section. Chairman James Williamson has bought $1.9m shares in the company, following a $1.4m purchase in February. He holds around 16% of the company. One to dig deep on to see if there is anything to that large purchase.

Company Spotlight (Pro)

❗️Daily ASX Company Announcements

A snapshot of some of the companies out with news today

• Orora has provided an update on the French Competition Authority's investigation into its Saverglass subsidiary. The regulator visited Saverglass' French office as part of a broader investigation into suspected anti-competitive practices in the glass packaging industry following customer complaints about price increases. Orora said the investigation concerning its practices allegedly occurred before it acquired Saverglass. Saverglass is confident that appropriate business practices were followed.

• Auckland International Airport has agreed to reduce flight prices over the next two years after a Commerce Commission report found it overcharged customers by $NZ190 million.

• WiseTech Global has revealed the findings of its shareholder engagement survey, which sought feedback from top institutional investors on key governance matters. Shareholders want the company to publish a summary of the Board Review into Executive Chair Richard White, develop a clear CEO succession plan while maintaining White's involvement, strengthen board independence, and increase engagement with leadership.

• Opthea is discontinuing a second trial of its eye disorder drug OPT-302 after it failed to "achieve the primary endpoint" when used with Ranibizumab to treat wet macular degeneration. This follows last week's negative results from another trial combining OPT-302 with Aflibercept. The company immediately ceased the trials but stated this wouldn't trigger the investor payouts of up to $US680 million it had previously warned about.

• Downer EDI has secured a $NZ600 million contract with New Zealand energy distributor Powerco to provide electricity field services for up to 12 years. The agreement to replace Downer's current work with Powerco covers maintenance, minor capital works, and fault repairs across two regions of Powerco's North Island electricity distribution network.

• Domain Holdings board has unanimously recommended the takeover bid from CoStar to shareholders after receiving an improved offer of $4.43 per share. The property listings platform has granted CoStar exclusive access to conduct due diligence for four weeks. CoStar declared this revised bid, which it said was its "best and final price."

• ANZ has brought forward the start date for its incoming CEO, Nuno Matos, to May 12. Current CEO Shayne Elliott will continue in his role until May 11 and provide handover support until September 30.

• Accent Group, in response to an AFR article, confirmed it remains in "active discussions" with Frasers Group about a potential joint venture to operate Frasers' Sports Direct business in Australia and New Zealand. The deal may also involve increasing Fraser’s existing stake in Accent - currently 14.57%.

• Woodside is offloading its Greater Angostura assets in Trinidad and Tobago to Perenco for $206 million as part of its strategy to streamline its portfolio and boost cash flow. The oil and gas company announced the sale late Friday, noting that the proceeds will support "core priority" investments and shareholder returns.

• ASX has received regulatory action from the RBA and ASIC following a CHESS batch settlement failure on December 20, 2024, caused by issues with the system's memory allocation logic.

Markets (Pro)

Commodity Prices

Bonds

Forex

Global Health Check

Deep Dive (Pro) - Read the full article here

The Cyclical Nature of Commodities

Investing in commodities can be a roller-coaster ride. Investors often hear about high-performing commodities only after reaching all-time highs, leaving them to buy at the top or watch from the sidelines. This reactionary approach rarely pays off in the volatile world of commodity markets.

The Nature of Commodities

Commodity markets are inherently cyclical, with prices moving through peaks and troughs as supply and demand fluctuate. High prices stimulate increased production and investment, often creating the conditions for oversupply and subsequent downturns.

Conversely, during periods of depressed prices, producers cut back expenditures and projects, eventually tightening supply and triggering the next upturn. This self-correcting mechanism means today's bust often becomes tomorrow's boom. Savvy investors target undervalued commodities at cycle bottoms, recognising that when companies scale back operations, supply-demand balances can shift from surplus to deficit, driving strong price recoveries. This pattern underscores why contrarian thinking in these "unusually cyclical, unusually volatile" markets can reward patience.

Gold & Copper: Rising Stars

Gold and copper have experienced strong price increases recently. Gold is trading at record highs above US$3,000/oz—a 63% jump from late-2023 lows. Multiple factors have fuelled gold's rise:

• Its traditional safe-haven status during global economic uncertainty

• Geopolitical tensions, particularly the US-China trade war

• Central bank purchasing at historic levels, with China, adding over 300 tonnes between November 2022 and December 2023

Copper has also reached historic levels, hitting $5.20/lbs in March 2025. This surge has been driven by:

• Global electrification push (EVs, renewable energy infrastructure, grid expansion)

• Supply constraints from years of underinvestment

• China's economic reopening and Western climate initiatives

However, risks remain for both metals, including potential economic slowdowns, easing geopolitical tensions, or unexpected supply increases.

Companies Riding the Wave

1. Evolution Mining (ASX: EVN) has seen its share price climb significantly due to higher gold prices. The company reported record earnings in FY2024, with EBITDA margins expanding to 47% while doubling its final dividend. Evolution's strategy of "margin over ounces" has paid off in the high-price environment.

2. Sandfire Resources (ASX: SFR) has benefited from rising copper prices. After struggling with debt following its 2021 acquisition of the MATSA copper mine in Spain, the company has returned to profitability. In the half-year to December 2024, Sandfire's revenue jumped 37% year-on-year, delivering a net profit of A$51.5 million.

Uranium: A Recent Correction

The uranium market has experienced significant volatility. After a long period of low prices in the 2010s, uranium began a strong upward cycle in 2020-2021. By January 2024, spot prices briefly hit triple digits (US$100-107 per pound), levels not seen since the 2007 boom.

This surge was driven by revived nuclear demand and constrained supply. However, prices have recently pulled back due to:

• Profit-taking and unwinding of speculative positions

• Dormant projects moving toward restart

• Secondary supplies being sold into the high-price market

Paladin Energy (ASX: PDN) rode the uranium upswing but has faced challenges over the past year, with its share price dropping more than 50%. The company announced a deal to acquire Canada's Fission Uranium Corp, which led to uncertainty and shareholder dilution. Additionally, extreme rainfall in Namibia recently forced Paladin to suspend operations at its Langer Heinrich mine temporarily.

Boss Energy (ASX: BOE) achieved its first production from the Honeymoon mine in late 2023, selling approximately 400,000 pounds of U₃O₈ at US$77.77/lb. Despite reporting that the ramp-up is on schedule and on budget, Boss remains the most shorted stock on the ASX with a 24.5% short interest.

Lithium: The Classic Boom-Bust

Lithium epitomises the commodity boom/bust cycle. From 2020 through 2022, it was the hottest commodity, driven by the EV revolution and soaring battery demand. Lithium carbonate prices in China skyrocketed from under US$10,000 per tonne in 2020 to over US$80,000 per tonne by late 2022.

However, high prices triggered a supply response, with new projects and expansions worldwide. By mid-2023, signs of oversupply emerged just as EV sales growth began to slow. The result was a price collapse of over 70% between late 2022 and late 2023.

Several factors could potentially drive a lithium rebound:

• Re-acceleration in EV sales across major markets

• Renewed policy support through subsidies or emissions mandates

• Production cuts from higher-cost producers

• Reversal of inventory destocking in the battery supply chain

Pilbara Minerals (ASX: PLS), Australia's largest independent lithium miner, rode this volatility wave. During the boom, its share price soared above $4.20 in 2022. But as lithium prices crashed, Pilbara's FY2024 profit plummeted 89% to $257 million (from $2.39 billion), with revenue dropping 69% as average realised prices fell 74%. Despite this, Pilbara weathered the downturn better than peers, maintaining profitability with a 43% EBITDA margin and ending the period with a $1.5 billion cash balance. The company has shifted focus to prudent capital management and staged growth aligned with market conditions.

Lessons for Investors

The contrasting fortunes of gold, copper, uranium, and lithium demonstrate the fundamental cyclical nature of commodity markets. These cycles are self-correcting: high prices eventually lead to oversupply and price declines, while low prices prompt production cuts that create scarcity and price increases.

For investors, timing is crucial. The best opportunities often emerge when sentiment is negative, and prices are depressed—precisely when most investors have abandoned the sector. By understanding these cycles and maintaining a contrarian mindset, investors can position themselves to capitalise on the turns in commodity markets rather than chasing performance after prices have already peaked.

Headlines (Pro)

📰 Local News

• According to the Department of Industry, Science and Resources, Australia's commodity exports are forecast to drop 6.74% to $387 billion this financial year. Lower US dollar prices will drive further declines to $343 billion by 2030, with iron ore prices falling from US$103 to US$86 per tonne in 2024-25, slashing export earnings from $117 billion to $81 billion by 2029-30.

• Australian ETFs tracking domestic equities are heading for record quarterly inflows of A$2.5 billion ($1.6 billion) in early 2025, up 19% since the end of 2024, according to Global X Management and Bloomberg data.

 🌎️ Around The Globe

• BlackRock's U.S. consortium deal to purchase two Panama Canal zone ports faces delays as Chinese antitrust regulators launch an investigation.

• China's finance ministry will inject $69 billion into four major state banks through share placements, fulfilling Beijing's promise to strengthen capital buffers.

• Disney and ABC face an FCC investigation into their diversity, equity and inclusion practices, with the regulatory agency checking for potential violations of equal employment opportunity regulations.

• Japan's Financial Services Agency plans to revise laws to classify crypto assets as financial products, according to the Nikkei. The change would subject cryptocurrencies to insider trading restrictions, prohibiting transactions based on undisclosed information.

• Nikola founder Trevor Milton, previously sentenced to four years for investor fraud, received a full presidential pardon from President Trump.

• Oracle Health faces an FBI investigation after a February data breach exposed patient information from U.S. hospitals. Separately, a hacker called rose87168 claims to have stolen 6 million Oracle Cloud authentication records through a server vulnerability.

🤖 All About AI

• xAI, the artificial intelligence company behind SpaceX and Tesla, acquired the social media platform X in a transaction valued at $33 billion.

• OpenAI has implemented temporary rate limits on ChatGPT's image generation feature, with CEO Sam Altman citing "melting GPUs" from overwhelming demand. The company had already delayed the feature for free-tier users, but these measures proved insufficient to reduce system strain.

Technicals (Pro)

Highs & Lows

A list of companies hitting 52-week highs/lows:

On a Roll

Companies on long winning/losing streaks.

Winning Streaks

• Auckland Airport - 6 days

• Catalyst Metals - 5 days

• Bell Financial Group - 4 days

Losing Streaks

• HMC Capital (HMC) - 7 days

• Clarity Pharmaceuticals (CU6) - 7 days

• Digico Infrastructure REIT - 5 days

Brokers (Pro)

Research Report - Southern Cross Gold

Shaw and Partners maintains a Buy rating for Southern Cross Gold Consolidated (SX2) with an increased price target from $3.69 to $6.03, representing a 21.5% upside from the current price of $4.96. The target increase follows successful drilling at the Golden Dyke prospect, which extended mineralisation by 120m down dip and identified a previously unrecognised parallel zone.

Recent drilling success has prompted Shaw and Partners to raise their Exploration Target estimate from 2.5Moz AuEq to 4.0Moz AuEq, with significant potential remaining as only about 5% of the total 12km trend has been drilled. Notable high-grade intercepts include 5.4m at 29.6g/t Au from 584m and 3.2m at 18.0g/t Au from 382m.

SX2 is well-funded for future exploration with a $18m cash balance and is expanding operations with eight drill rigs soon to be on site. The company is converting about 50koz per month into resource and aims to increase this rate. Upcoming catalysts include results from 15 holes currently being analysed, exploration at new targets, and metallurgical study results with existing work indicating 93-98% gold recovery through conventional processing.

You can access the report below:

Broker Ratings

• Bell Potter has upgraded Northern Star Resources to Buy from Hold, raising the target price to $22 from $20. The broker increased gold price forecasts by 7% to US$2,890 in 1H 2025, 9.3% to US$2,950 in 2H 2025, and 12% to US$2,800 in 2026, citing the miner's "attractive" production growth to 2moz per annum in FY26.

• Bell Potter has downgraded Pantoro to Sell from Hold, raising the target price to 14c from 11.5c. The broker upgraded gold price forecasts by 7% to US$2,890 in 1H 2025, 9.3% to US$2,950 in 2H 2025, and 12% to US$2,800 in 2026, lifting Pantoro's EPS estimates by 8% for FY25 and 18% for FY26.

Broker Forecasts

• RBC Capital Markets has upgraded gold price forecasts, predicting averages of $US3,039/oz in 2025 and $US3,195/oz in 2026. The investment bank cites "bad vibes" and "high uncertainty" as key market drivers.

• Goldman Sachs economists now predict three Federal Reserve interest rate cuts in 2025 (July, September, and November), revising their earlier forecast of two cuts this year and one in 2026. The change follows increased tariff assumptions under President Trump, with Goldman now expecting average US tariff rates to rise 15 percentage points in 2025, potentially slowing economic growth and increasing unemployment.

A Little Extra (Pro)

 ⬇️ Short Data

Top 10 shorted stocks on the ASX - as of March 25

The Insiders

Director buying and selling.
On-market and Off-market trades only.
Net Buy/Sell positions in the last 14 days

💵 Dividends

Companies which traded ex-divided today

🔍️ ETFs

Best and Worst performing ETFs today, min. $100m FUM

Top 5

Bottom 5

The Last Word

Let us know what you thought of today’s newsletter. 😀 

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.