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Welcome to Equity Espresso’s Daily Recap. 

The Australian sharemarket experienced a decline on Thursday, with the S&P/ASX 200 dropping by 0.5 per cent or 33.8 points to close at 7504.1. This was due to all sectors, except industrials and utilities, trading in the red. Consumer discretionary companies and technology stocks were the major contributors to this decline. The sharemarket was unable to maintain the gains it had made the day before, which had pushed it to a 10-month high. This decline was also influenced by a sharp fall in Wall Street overnight.

Some of the top-performing large-cap companies in the utilities sector were Mercury NZ (up by 6.3%), AGL (up by 2.6%), and Meridian Energy (up by 1.5%). This helped the utilities stocks to gain by 0.4%. Meanwhile, the industrials sector also showed strength with a 0.4% gain, thanks to notable advances by Transurban Group (up by 0.9%), Computershare (up by 1.2%), and Infratil (up by 1.4%).

Miners had a weak performance on the local stock market, with lithium players Allkem and Pilbara Minerals losing steam and declining by 5.6% and 3.4%, respectively. The decline in the prices of lithium was responsible for lithium players being among the worst-performing large-cap stocks on the local bourse. The 99.5% battery grade lithium carbonate prices dropped by 1% in Shanghai, which affected the performance of lithium players.

Despite a rise in iron ore prices, some of the biggest mining companies such as BHP, Rio Tinto and Fortescue failed to lift the index. However, Fortescue managed to gain 0.5% throughout the day, reaching an intraday record high. ANZ was the only one of the big four banks that finished in the green, up by 0.1%. ANZ fronted shareholders at its annual meeting on Thursday and warned them of a weaker economic outlook.

Wall Street

There was a significant slowdown in the massive rally on Wall Street after companies reported disappointing profits and warned that the market had surged too quickly and too high. As a result, the S&P 500 fell 1.5%, marking its most substantial decline since the beginning of a massive rally in late October. The Dow Jones also dropped 1.3% from its record high, while the Nasdaq composite declined by 1.5%.

One of the market's largest losses was experienced by FedEx with a 12.1% drop in its shares. The company reported weaker revenue and profit than expected by analysts for the latest quarter. Due to pressures on demand, it also revised its full fiscal year revenue forecast from being roughly flat to a fall from the previous year's level.

The delivery company that ships packages globally has indicated a possible decrease in demand. This news may be concerning for those who have been optimistic about the economy and the hope that the Federal Reserve can slow down inflation without causing a recession.

Economic Data

• The annual inflation rate in Japan decreased to 2.8% in November 2023 from 3.3% the previous month, indicating the lowest level since July 2022.

• According to the latest report, the number of Americans who filed for unemployment benefits increased slightly by 2,000 to reach 205,000 in the week ending December 16th. However, this number is still close to the two-month low of 203,000 recorded in the previous week and is significantly lower than the market's expectation of 215,000.

• The yield on the 10-year US Treasury note dropped below 3.85% on Thursday, reaching its lowest point since July. This trend was driven by increasing expectations that the Federal Reserve will begin cutting interest rates early next year, which has led to increased demand for government bonds.

• US 30-year mortgages hit their lowest level since June, easing the cost of housing and boosting consumer spending.

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Quick Singles

🌏 Around The Globe

• According to a recent report by Axios, Warner Bros. Discovery and Paramount are currently in talks about a potential merger. The CEOs of both companies recently met to discuss the matter. Presently, Warner Bros. Discovery has a market value of around $43 billion, while Paramount's market value stands at approximately $15 billion.

• On Wednesday night, around 90,000 X users experienced an outage, marking the largest outage since Elon Musk's takeover. Concurrently, Google searches for Threads peaked.

• Wayfair's CEO is encouraging employees to work more, despite the trend of wanting less work.

• Electric scooter company Bird files for Chapter 11 bankruptcy, will sell some of its assets to existing lenders; Bird, founded in 2017, went public in 2021 via special purpose acquisition company merge.

• Activision Blizzard's CEO Bobby Kotick is set to step down on December 29th as part of Microsoft's acquisition of the video game company, with a leadership change expected to follow.

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DISCLAIMER: None of the information provided in this newsletter should be constituted as financial advice. This newsletter is strictly for educational purposes only. It should not be taken as investment advice or a solicitation to buy or sell assets or make financial decisions. Please do your research.