Good Evening,

Welcome to Equity Espresso

We’re here to catch you up on the day’s stock market news in Australia and abroad.

Here’s a sample of what you may have missed today:

1. 📈 Higher For Longer Warning From the Fed

2. 🚗 EV Partnership - CBA & Tesla

3. 🗾 Tourism Comeback in Japan

4. 🛑 ACCC Put the Brakes On

5. 🛒 Amazon Hiring Spree

The Recap

ASX Fourth Day Fall On
Feds Hawkish View

The losing streak continues, with the ASX200 index falling for the fourth straight day, shedding another 98.1pts or 1.37% to close at 7,065.20. A hawkish outlook from the U.S. Federal Reserve sent global equity markets lower, warning that interest rates will be “higher for longer” in 2024.

No sector was spared, with all 11 falling on the day, as Energy (-1.96%), Financials (-1.76%), and Health Care (-1.69%) dropped the most.

Sayona Mining (-11.4%) and Brainchip Holdings (-11.1%) were two stocks that saw sharp falls after both companies were moved out of the ASX200 this week as part of the quarterly rebalance.

Asian stocks also copped a battering, with equity markets in South Korea, Hong Kong and Japan all trading lower on Thursday.

The ACCC was busy playing defence, raising concerns about Endevaour Group’s proposed buyout of Rye Hotels and then blocking Transurban’s bid for Melbournes East Link toll road.

Economic News

• New Zealand’s GDP rose by 3.2% annually for the September quarter, which was also up 0.9% on a quarter-over-quarter basis, beating analysts’ estimates of 0.4% growth. Business services were the biggest driver of economic growth this quarter.

• The U.K. inflation rate unexpectedly slowed during August, raising the prospect of the Bank of England pausing its long run of interest rate hikes when it meets on Thursday. The consumer price index sank to an 18-month low of 6.7%, marginally down from 6.8% in July but above forecasts of 7.0%.

ASX200 Stock Snapshot

Wall Street

Equity markets fell, and bond yields rose as the Federal Reserve said to brace for interest rates to be higher for longer after keeping rates on hold for September. The S&P500 dropped by -0.94%, whilst the NASDAQ fell 1.53%. Two-year bond yields crossed 5.17%, hitting their highest point since 2006.

The Federal Reserve has chosen to keep the federal funds rate target range at 5.25% to 5.5%. However, 12 of 19 officials have indicated their support for another rate hike in 2023, per the quarterly projections.

Jerome Powell said the Fed is prepared to increase rates further if required and intends to maintain a restrictive policy until they are sure that inflation is sustainably moving towards their goal.

Klaviyo’s stock price rose 9.2% in their New York Stock Exchange debut Wednesday, with the stock closing at $32.76, declining throughout the day after opening at $36.75. Klaviyo priced 19.2 million shares late Tuesday at $30, valuing the company at just over $9 billion on a fully diluted basis.

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Quick Singles

🪃 Local News

• The ACCC has opposed Transurban’s acquisition of a 55% interest in Horizon Roads, which operates Melbourne’s Eastlink toll road, concluding that the transaction would likely “substantially lessen competition for future toll road concessions in Victoria”. The proposed acquisition would result in Transurban entrenching its position in Victoria and prevent the entry of a rival operator which could compete closely for future toll road concessions in Victoria,” said Gina Cass-Gottlieb, chair of the Australia Competition & Consumer Commission.

• Commonwealth Bank (CBA) will partner with Tesla to allow customers to access finance services for electric vehicle (EV) purchases. Customers can apply for personal loans through the bank directly from Tesla's website at an interest rate of 5.49% per annum. The low-interest rate will be available to customers who meet specific criteria and use their vehicle as a security.

• The ACCC said it’s concerned that the proposed Endeavour Group acquisition of the Rye Hotel in Rye, Victoria, would likely substantially lessen competition for takeaway liquor in the local Rye area. "The BWS Rye and the Rye Hotel Thirsty Camel are the two largest liquor stores in the local area with a comparable size and product range and are likely to be each other's strongest competitors," ACCC Commissioner Stephen Ridgeway said.

• Thorn Group announced that it has entered into a Scheme Implementation Deed with Somers Limited, which will acquire all of the ordinary shares in Thorn that it does not already own for $1.171 per share in cash.

🌏 Around The Globe

• Stellantis has made a new contract offer to the United Auto Workers (UAW), who will review the offer but declined to share details of the new proposal.

• Pinterest shares rose 3.1% after management said it expects year-over-year revenue growth to accelerate after a slowdown in the last two years.

• Tourists are flocking to Japan - The estimated number of visitors to Japan in August recovered to 85.6% of the level marked just before the COVID-19 pandemic. The figure stood at 2,156,900 against 2,520,134 in August 2019.

• Elon Musk has suggested that X may have to start charging a small fee for all users as the only way to combat bots on the platform.

• YouTube has demonetised Russell Brand’s channel, which has over 6 million subscribers, in light of sexual assault allegations against the comedian.

• Google Bard has recently been updated to include integration with Google apps. This new feature allows Bard to cross-reference answers with content found on the web. Additionally, Bard is now capable of functioning in over 40 different languages. Opt-in Bard extensions also allow data to be pulled from Google's other services and integrated into conversations.

• Amazon unveiled plans to employ 250,000 new warehouse and delivery staff for the upcoming holiday shopping season in anticipation of the expected high demand. This is a significant increase from the 150,000 workers Amazon hired during the same period last year when they achieved record sales over the Thanksgiving weekend.

₿ Crypto Corner

• The Australian Securities and Investments Commission (ASIC) has filed a lawsuit against Bit Trade, a provider of Kraken crypto exchange, for not complying with the regulations for margin trading product distribution and design obligations. The ASIC case is centred on Bit Trade's alleged inability to conduct a "target market determination" before providing the margin trading product to Australian clients, as required by law.

• FTX filed a lawsuit against Sam Bankman-Fried's parents for "misappropriated funds," accusing them of profiting from the bankrupt crypto exchange's creditors.

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Markets

Index & Commodity Prices

Bond Prices

ASX By Sector

ETF Watch

Newsletter Recommendation

Movers and Shakers

✅ Biggest Gainers

New Zealand-based dairy manufacturer Fonterra (FSF) reported FY23 earnings today, which sent its share price 4.5% higher after reporting a 170% YoY increase in reported profit after tax to $1.6 billion.

Financial Highlights

• Normalised Profit After Tax - $1,329million, +147%

• Earnings Per Share - $0.95, +163%

• Full Year Dividend - $0.50 per share,

• Final 2022/23 season Farmgate Milk Price of $8.22 per kgMS

Looking ahead, Fonterra forecasted the 2023/24 Farmgate Milk Price range of $6.00 - $7.50 per kgMS, with a midpoint of $6.75, reflecting the reduced demand for whole milk powder from key importing regions. Forecasted earnings for FY24 from continuing operations are estimated to be $0.45 - $0.60 per share.

“We are watching market dynamics closely, and there are indications demand for New Zealand milk powders will start to return in early 2024. Demand for other products, including Foodservice and our value-added ingredients, continues to be robust,” said Fonterra CEO Miles Hurrell.

🔻Biggest Fallers

Biopharmaceutical company Opthea (OPT) announced that it had completed the retail component of its fully underwritten 1 for 3.07 pro-rata entitlement offer of new fully paid ordinary shares.

Opthea raised A$16.3 million as part of the retail offer, with 8.1 million new shares taken up, representing a total take-up rate of 22.8%.

The capital raise is the final stage of the approximately A$90.0 million to be raised, with an institutional placement completed in late August, raising about A$73.7 million.

Post of The Day

What The?

Tasmanian Tiger's RNA Revival

Scientists have managed to sequence RNA from the long-extinct Tasmanian tiger, also known as the thylacine. This remarkable feat was achieved using samples from a 132-year-old museum specimen, offering a fresh perspective on the physiology of these unique creatures that vanished from our world in the 1930s.

The Tasmanian tiger, a carnivorous marsupial, once roamed the Australian continent, hunting kangaroos and other prey. Sadly, by 1936, this striped carnivore was declared extinct. However, the recent extraction of RNA from this ancient creature has rekindled hopes and excitement in the scientific community. Unlike DNA, which is more stable, RNA is known to degrade rapidly. Yet, researchers retrieved millions of RNA sequences from the thylacine's muscle and skin samples, revealing information about the animal's genes and proteins.

The study also uncovered RNA molecules from viruses that once infected the Tasmanian tiger. This opens up new avenues for studying ancient viruses and understanding past pandemics.

While the primary focus of the research was not to recreate extinct species, the findings have certainly sparked conversations about the potential of bringing back long-gone creatures like the Tasmanian tiger, dodo, or even the woolly mammoth.

Daily Quiz

Test Your Knowledge

Yesterday’s Daily Quiz Question. Which of these states has imposed an ‘Airbnb’ levy of 5.7%

Answer: Massachusetts. Taking effect from July 2019, hosts of short-term rentals in Massachusetts have to pay the same 5.7% state tax as hotels.

Well done to the 25% who got that correct! Florida was the most popular answer, with 41% of the vote.

A Little Extra

📉 Going Down?

Top 10 shorted stocks on the ASX - as of September 15

Pilbara Minerals continues to rise, increasing from 6.13% three months ago to 11.45% as of September 15

1. Pilbara Minerals (PLS) - 11.45%

2. Flight Centre (FLT) - 9.58%

3. Genesis Minerals (GMD) - 9.15%

4. Elders Limited (ELD) - 9.03%

5. IDP Education (IEL) - 8.62%

6. Core Lithium (CXO) - 7.81%

7. Select Harvests (SHV) - 7.62%

8. Sayona Mining (SYA) - 7.49%

9. Syrah Resources (SYR) - 7.45%

10. Mesoblast (MSB) - 7.33%

📊Broker Ratings

What do the brokers have to say?

1. 29Metals (29M) - Upgraded to Overweight from Equal-Weight (Morgan Stanley). Target Price $0.85

2. BHP Group (BHP) - Downgraded to Lighten from Hold (Ord Minnett) Target Price $43.90

3. Deterra Royalties (DRR) - Upgraded to Overweight from Equal-weight (Morgan Stanley) Target Price $5.50

4. IGO Ltd (IGO) - Downgraded to Underweight from Equal-Weight (Morgan Stanley) Target Price $11.60

5. New Hope (NHC) - Downgraded to Hold from Accumulate (Ord Minnett) Target Price $6.40

6. South32 (S32) - Upgrade to Accumulate from Hold (Ord Minnett) Target Price $4.10

👨‍💼 Director Transactions

What are the insiders doing? (On-market only)

💲Dividends

Companies trading ex-dividend today

📅 Economic Calendar

Data to keep an eye on this week

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.