ASX Apocalypse: U.S. Job Jitters Trigger Global Sell-Off

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Welcome to Equity Espresso’s Market Recap.

Yikes! It was carnage on global markets today with very few places to hide. The ASX 200 index had its worst sell-off since May 2020, shedding 293 pts. or 3.7% to 7,649.60. The days of 8,000+ are well and truly in the rearview mirror after losing over 2% on Friday.

Unsurprisingly, all 11 sectors ended the session lower, with even the best performer, Health Care, losing 1.79%. Technology (-6.61%) stocks were hit hardest, followed by Financials (-4.98%) and Real Estate (-4.61%).

Softer economic data on Friday sparked a market sell-down on Wall Street last Friday, which flowed into the Australian and Asian markets today. Non-farm payroll data came in softer than expected, while the jobless rate rose higher, fuelling concerns of a looming recession in the United States. The U.S. economy added 114,000 jobs in July 2024, well below forecasts of 175,000 and 179,000 in June. It is also the lowest level in three months and below the average monthly gain of 215,000 over the last year.

If you thought the ASX200 index's loss of 3.7% was bad, spare a thought for the Japanese equities market, where the Nikkei 225 lost a whopping 12.2% today. South Korea’s KOSPI index wasn’t spared, falling by 8.7%.

Tonight doesn’t look any better in the U.S. NASDAQ futures are 5.0% lower this afternoon.

In company news:

• Argo Investments (-2.01%) reported a full-year profit of $253 million in the past year, down from $271.7 million in the previous year, but it kept its full-franked dividend of $0.18 in check.

• TPG Telecom (-1.96%) shares fell slightly after confirming media speculation that it is in discussion with Vocus Group regarding the potential sale of its fibre network.

• Ramsay Health Care (-0.26%) said it expects its FY24 net profit to be between $265 million and $270 million, down from $278.2 in the previous year.

Wall Street

Another broad sell-off occurred for the second straight day on Friday, with the NASDAQ (-2.43%) the big faller after a weak jobs report sparked fears of a looming recession. The S&P 500 (-1.84%) and Dow Jones (-1.51%) both lost significant ground.

Nonfarm payrolls increased by 114,000 jobs during July, well short of the 175,000 estimated by economists. Unemployment rose to 4.3%, nearing a three-year high.

According to CME's FedWatch Tool, expectations for a 50bps rate cut at the Federal Reserves September meeting jumped to 69.5% from 22% in the prior session.

Amazon (-8.78%) shares fell after it reported mixed results in the second quarter. Revenue rose 10% from a year earlier to $147.98 billion, below estimates of $148.56 billion. Net Income doubled from a year earlier to $1.26 p/s, well above estimates of $1.03 p/s. Apple (+0.69%) shares rose amongst a sea of red on the market after reporting a 5% rise in revenue to $85.78 billion, slightly above expectations. Snap (-26.93%) stock plummeted after guiding weaker-than-expected revenue for the third quarter of between $1.335 billion and $1.375 billion, with adjusted earnings of between $70 million to $100 million,

S&P500 Sector Performance

Economic Data

• The U.S. economy added 114,000 jobs in July 2024, well below the 179,000 added in June and forecasts of 175,000. It is also the lowest level in three months.

• U.S. Average Hourly earnings on private nonfarm payrolls increased by 0.2% to $35.07 in July 2024 after a 0.3% increase last month.

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Quick Singles

🌎️ Around The Globe

• Intel will lay off over 15% of its employees as part of a $10 billion cost reduction after reporting weaker results than expected.

• Mars is exploring a potential acquisition of Kellanova K.N., maker of snacks such as Cheez-It and Pringles. The company is currently valued at $27 billion, including debt.

• Microsoft's latest annual report included OpenAI on its list of competitors. Open AI is listed as a competitor in AI offerings, search, and news advertising.

• Reddit has acquired A.I. start-up Memorable AI to help its advertisers create better, tailored, and more engaging ads.

• Streaming Conglomeration - Disney, Fox, and Warner Bros. Discovery will launch a standalone sports streamer called Venu later this year. Venu will cost $42.99 per month and include ESPN networks and ABC, Fox, TNT, and more.

• The Department of Justice is suing TikTok for allegedly allowing kids under age 13 to make accounts without their parents’ permission and collecting “extensive data” on them, violating U.S. child privacy law.

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

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