Market's Winning Streak Ends | Star's Horror Show Continues

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Welcome to Equity Espresso’s Market Recap.

The Australian stock market ended its five-day winning streak on Thursday, with the S&P/ASX 200 index dropping 0.24% or 19.9 pts. to close at 8,329.2 points. The decline was broad-based, with 8 out of eleven sectors falling, led by Industrial (-0.93%) stocks, as profit-taking pressured the market following recent gains.

The Utilities (+0.67) sector was the day’s best performer, led by gains from Origin Energy (+0.82%) and Mercury NZ (+1.32%). The major banks faced selling pressure, with Macquarie Group (+1.76%) posted gains while also passing ANZ Group’s market cap, breaking into the ‘Big 4’. The Materials (+0.07%) sector edged out a gain, largely thanks to gold miners and Fortescue’s (+1.94%) rise.

Oil prices declined over 1% to settle below $74/bbl as West Texas Intermediate futures failed to break through the key technical resistance level of the 200-day moving average at $75.48. Despite the technical weakness, fundamental factors remained supportive, with U.S. crude inventories dropping by 959,000 barrels last week, marking the seventh consecutive weekly decline in stockpiles.

Company News

• Lovisa (-10.37%) stock fell after UBS downgraded the company to a ‘sell’ rating, pointing to the company’s modest rate of store growth.

• Macmahon Holdings (-1.54%) secured a $463 million, seven-year mining contract for Indonesia's Awak Mas gold project, starting in early 2025. The work includes open-cut mining services, with $17 million growth capital planned over four years from existing equipment.

• Platinum Asset Management (-1.42%) reported $289 million in net outflows during December 2024, with $247 million specifically from its Platinum Trust Funds. Despite these outflows, which contributed to a $4.5 billion decline in funds over the past year, total funds under management increased slightly by 0.8% to $11.1 billion compared to November.

• Star Entertainment (-30.77%) burned through $107 million in cash during the December quarter, leaving only $79 million in available funds as of 31 December 2024. This cash burn occurred despite drawing $100 million from a new debt facility in December 2024.

• Westgold Resources (-13.65%) stock fell after reporting increased gold production of 80,886/oz in Q2 FY25, up from 77,369/oz in Q1, bringing first-half production to 158,255/oz. Investors appear cautious about the company hitting its full-year production guidance of 400,000 - 420,000/oz.

Wall Street

U.S. stock markets showed mixed performance on Wednesday, with the Dow Jones (+0.25%) and S&P 500 (+0.16%) making modest gains, while the Nasdaq declined by 0.66%. The session was uncertain as investors processed conflicting jobs data and reports about President-elect Trump considering a national economic emergency declaration regarding inflation. Healthcare (+0.52%) led the gains among S&P 500 sectors, rising 0.53%, though small-cap stocks tracked by the Russell 200 Index fell 0.52%. Markets will be closed on Thursday to honour former President Jimmy Carter, who died late last month.

The Federal Reserve's December meeting minutes revealed growing concerns among officials about persistent inflation pressures, particularly as they began evaluating the potential impact of the incoming Trump administration's policies. The December 17-18 meeting minutes highlighted policymakers' increasing focus on the interplay between monetary policy and anticipated governmental changes.

eBay's (+9.86%) stock surged to a new 52-week high following news of a partnership with Meta, which is testing the integration of eBay listings into Facebook Marketplace. Under this arrangement, potential buyers browsing Facebook Marketplace will be redirected to eBay's platform to complete their purchases.

S&P500 Sector Performance

Economic Data

• Australian Retail sales increased by 0.8% month-on-month in November 2024, accelerating from a 0.5% rise in the previous month while falling short of the market consensus of 1.0%.

• Australian Export of goods advanced by 4.8% from a month earlier to a nine-month high of $43.82 billion in November 2024, after a 3.5% growth in the previous month.

• China’s Annual Inflation rate edged down to 0.1% in December 2024 from 0.2% in the previous month, aligning with market estimates and marking the lowest print since March.

• U.S. Private businesses added 122k workers to their payrolls in December 2024, the least in four months, compared to 146k in November and below forecasts of 140k.

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Quick Singles

🌎️ Around The Globe

• The Biden administration is preparing a final set of A.I. chip export restrictions before leaving office. The new regulations, expected by Friday, would expand semiconductor controls globally rather than just targeting China and Russia. They would create a three-tier system for chip trade restrictions.

• Dubai-based DAMAC Properties announced a $20 billion investment in U.S. data centres, primarily targeting mid-country locations. The announcement was made by President-elect Trump at Mar-a-Lago, with DAMAC's CEO, Hussain Sajw, present.

• Google DeepMind is establishing a new team focused on A.I. models for physical world simulation, led by Tim Brooks, a former OpenAI Sora co-lead who joined Google in October. The team will operate within Google DeepMind's structure.

• John Deere unveiled autonomous tractors and trucks at CES 2025 to address the agricultural labour shortage. The company's CTO, Jahmy Hindman, noted that these self-driving machines are designed to tackle the farming industry's lack of skilled workers.

• President Biden’s administration issued a regulation through the Consumer Financial Protection Bureau banning medical debt from credit reports, a move expected to eliminate $49 billion in medical bills affecting 15 million Americans.

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*1-year, 3-year and 5-year returns are calculated as of November 30 2024.

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