ASX Dips as ShanghaiLeaps

Good Evening,

Welcome to Equity Espresso’s Market Recap.

The Australian sharemarket experienced a volatile session on Tuesday, ultimately closing lower as Material (-1.74%) stocks and a weakened Iron Ore price weighed heavily on the index. The S&P/ASX 200 index fell 28.5 points, or 0.4%, to 8,176.9, with seven out of eleven sectors finishing in negative territory. This decline came despite initial optimism surrounding potential Chinese stimulus measures, which briefly propelled shares into positive territory at the start of trading.

Fortescue (-5.16%) was one of the biggest detractors in the Mining sector, followed by BHP Group (-2.12%) and Mineral Resources (-4.39%). The Health Care (+0.75%) and Utilities (+0.29%) sectors were the day's best performers, with CSL (+1.38%) clawing closer to the $300 mark.

Chinese stock markets surged at the start of the days open, with the Shanghai Composite rising 6% to over 3,500 and the Shenzhen Component jumping 9% to 11,500. This dramatic rally, which began in late September following China's announcement of a comprehensive monetary stimulus package, gained further momentum as markets reopened after a week-long holiday. The positive sentiment was bolstered by statements from Zheng Shanjie, chairman of China's National Development and Reform Commission. At a press conference in Beijing, Zheng expressed confidence in China's ability to achieve its annual economic and social development targets.

Company News

• Incitec Pivot (-0.67%) shares dipped after announcing CFO Paul Victor will depart the company on February 15

• NRW Holdings (-) announced it secured a $360 million contract from Evolution Mining for surface mining at Castle Hill, near Kalgoorlie. The project, running from November 2024 to mid-2030, includes load and haul, drill and blast, and site facility construction.

• Western African Resources (+7.46%) shares rebounded after clarifying that Burkina Faso's potential mining permit withdrawals, mentioned by the President, only target companies violating local laws, not affecting their operations.

Wall Street

Wall Street experienced a significant downturn on Monday, with all three major indexes closing down around 1%. The Dow Jones fell 0.94% to 41,954.24, the S&P 500 lost 0.96% to 5,695.94, and the Nasdaq declined 1.18% to 17,923.90. Adding to the market's woes were concerns about the Middle East conflict's potential impact on oil prices, which saw U.S. crude futures settle up 3.7% in their fifth consecutive advance. Following Friday's stronger-than-expected jobs report, traders reduced their bets on Federal Reserve interest rate cuts. The CME's FedWatch tool indicated an 86% chance of a 25-basis-point cut in November, with a 14% possibility of no rate cut.

The sell-off was broad-based, affecting 10 out of 11 major S&P 500 industry sectors. Energy was the sole gainer, up 0.4%, while Utilities (-2.32%) and Communications Services (-1.97%) were the biggest laggards. Tech giants also faced pressure, with Alphabet's Google ordered by a U.S. judge to overhaul its mobile app business, causing its stock to drop 2.5%.

Activist investor Starboard Value acquired a $1 billion stake in Pfizer (+2.17%), aiming to initiate a turnaround. Starboard has approached former Pfizer executives for support, criticising current CEO Albert Bourla's leadership for departing from disciplined cost management and investment in innovative drugs.

Insurance stocks, particularly property and casualty insurers, faced pressure as Hurricane Milton intensified to Category 5, prompting Florida evacuations. Allstate (-4.89%), Travelers (-4.36%), and Chubb (-4.61%) saw shares drop due to potential weather catastrophe exposure. Fort Lauderdale-based Universal Insurance (-19.52%) plummeted, reflecting heightened concern over potential insured losses from the hurricane.

S&P500 Sector Performance

Economic Data

• Australia’s NAB Business Confidence index rose to -2 in September 2024 from August’s revised -5, amid notable improvements in retail and recreation & personal services.

• Australia's Westpac-Melbourne Institute Consumer Sentiment index jumped 6.2% MoM to a two-and-a-half-year high of 89.8 in October 2024, a sharp turnaround from a 0.5% fall in the previous month following interest rate cuts abroad and more promising signs that inflation is easing locally.

• U.K. Retail Sales rose 1.7% on a like-for-like basis in September 2024 from a year ago, the fastest growth in six months amid higher spending on clothes in an early indication of a busy festive season.

Sponsor

Meet AptDeco – the startup redefining the $702B furniture resale market

AptDeco is changing how people buy and sell furniture. With over $84M in furniture sold and 500K+ users, AptDeco is a leading platform in the $702B furniture market. AptDeco partners with major brands like West Elm and Pottery Barn, managing everything from listings to delivery with a fully integrated platform that’s easy and sustainable. Backed by YC, Comcast Ventures, HearstLab and more, their mission is resonating with over $1.3M raised in their latest round.

Invest in a sustainable future

Quick Singles

🌎️ Around The Globe

• Apple is reportedly shifting from its annual product release cycle, aiming to accumulate features for more impactful market launches. The company is considering rescheduling the iPhone release to align hardware launches with new software features better, potentially altering its product introduction strategy.

• The EU plans to impose significant tariffs on Chinese electric vehicle imports, increasing from 10% to 45% over five years. This move, supported by most member states, aims to protect European automakers from perceived unfair Chinese subsidies despite concerns about potential EV price increases for consumers.​​​​​​​​​​​​​​​​

• Meta announced Movie Gen, a suite of A.I. models for video and audio generation and editing. The system includes a 30B video model, a 13B audio model, a personalised video model, and video editing capabilities. It can create 16-second HD videos with synchronised audio from text prompts.

• The U.S. adult obesity rate decreased by 2% from 2020 to 2023, coinciding with new weight-loss drugs like Ozempic in 2021. While a direct link isn't established, approximately one in eight US adults have tried these medications, with over 15 million prescriptions and 25,000 new users weekly, suggesting a potential correlation.

• Stellantis has sued the United Auto Workers union, alleging that the UAW filed "sham grievances" to justify potential mid-contract strikes. The lawsuit, filed in California, claims these actions would violate the no-strike clause in their collective bargaining agreement. This legal action highlights ongoing tensions between the automaker and the union.​​​​​​​​​​​​​​​​

• Wynn Resorts has been granted the UAE's first commercial gaming operator's license by the General Commercial Gaming Regulatory Authority. The company is developing a luxury resort on Al Marjan Island in Ras Al Khaimah in partnership with Marjan and RAK Hospitality Holding.

• Real Estate marketplace Zillow is adding climate risk data to its for-sale listings. The tool will include climate scores, maps, and data on flood, wildfire, heat, wind, and air quality risks.

Markets

ASX Company Movers

Commodity Prices

Bonds

Forex

Global Health Check

ETF Prices

🔍️ ETF Watch

Want to see how one of your ETFs compares to the rest?

Please reply to this e-mail and tell us an ETF or two you want to be included in the tables below.

Australian Index

Australian Sectors

Global Indices & Sectors

Global Strategy

Property & Infrastructure

Fixed Income

Mixed Assets

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

The Last Word

How are we doing?

We always love hearing from our readers and are constantly seeking feedback.

• How are we doing with Equity Espresso?

• Is there anything you’d like to see more of or less of?

• Which aspects of the newsletter do you enjoy the most?

Hit reply and say hello - or leave us feedback in the poll below:

If you enjoyed this newsletter, forward this e-mail to a friend.

If you’re that friend, subscribe here.

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 research before making any investment.