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Welcome to Equity Espresso’s Daily Recap. 

On Thursday, Australian shares closed at an 18-week high following indications that the US Federal Reserve was preparing to cut rates next year, leading to a surge in risk-on trading across the global markets. The S&P/ASX 200 index recorded its best one-day return of the year so far, finishing up 120.1 points or 1.7 per cent at 7373. The All Ordinaries index also rose by 1.7 per cent, with all 11 sectors finishing the day positively. The real estate sector, which is sensitive to changes in interest rates, performed exceptionally well, rising by 4 per cent.

The ASX experienced a rally after strong overnight trading on US indexes. This was a result of the Federal Reserve's decision to keep rates on hold and improve its 2024 forecast. As part of this announcement, the central bank's median dot-plot projection predicted a policy rate of 4.6% by the end of 2024, down from the 5.1% predicted in September.

Oil advanced from a five-month low on positive demand signals including a drop in US inventories and signs that the Federal Reserve has finished hiking interest rates.

Economic Data

• Australia's unemployment rate rose to 3.9% in November 2023, which is higher than the market's forecast of 3.8%. This is also the highest level since May 2022. The number of unemployed people increased by 18,000 to 572,000. Out of them, 383,600 were seeking full-time jobs, which is an increase of 10,600.

• Japan's core machinery orders, excluding those for ships and electric power companies, increased by 0.7% in October 2023. The figure is lower than the 1.4% gain in September but higher than the predicted 0.5% decrease.

• The Federal Reserve kept the fed funds rate steady at 5.25%-5.5% for a third consecutive meeting in December 2023, in line with expectations but indicated 75bps cuts in 2024. Policymakers said that recent indicators suggest that economic growth has slowed and job gains have moderated but remain strong, and the unemployment rate has remained low.

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Quick Singles

🪃 Local News

• NSW paramedics will receive an average pay increase of 25% over the next four years. These pay increases vary from 11% to 29% and will apply to almost 5,000 paramedics across the state. This is the largest pay increase paramedics in the state have ever received and will bring NSW paramedics' wages in line with other Australian states.

🌏 Around The Globe

• Choice Hotels International has launched an $8 billion bid to acquire Wyndham Hotels & Resorts, following previous failed attempts.

• It is expected that the $43 billion deal between Pfizer and cancer drugmaker Seagen will be closed this week.

• Ford Motor will reduce production of its all-electric F-150 Lightning pickup by around 50% next year, reversing a previous decision to increase plant capacity for the EV in 2023.

• Eli Lilly stock skidded Monday after a new study showed patients who stopped taking weight-loss drug Zepbound slowly regained weight over a year.

• Hasbro is cutting 1.1k jobs, ~20% of its workforce, amid declining toy sales. It’s the company’s second cut of 2023, following 800 layoffs earlier this year.

• The Arena Group, Sports Illustrated’s publisher, terminated CEO Ross Levinsohn a week after firing its operations president and COO, media president, and corporate counsel on the heels of the publication’s AI-generated content scandal.

• Mars’ snacking division has set an ambitious target for the next decade: to double its current annual revenue ($18B). Its secret weapon? Its 2017 acquisition of Kind bars, which it’s now expanding globally.

ASX News

🗞️ Company Announcements

• Alumina Limited rose to an eight-week high on Thursday after the WA government approved the company’s five-year bauxite mining plans in the state’s Jarrah forests.

• Genesis Minerals finished higher at $1.85 after striking a deal to buy the Bruno-Lewis and Raeside gold projects from Kin Mining.

• Viva Energy rose to $3.26 after the ACCC said it would not oppose plans by the petrol retailer to acquire Peregrine Corporation’s OTR Group.

• The board of New Zealand-based Volpara Health Technologies has backed a buyout offer from AI cancer detection developer Lunit. The shares have jumped 42.6 per cent to $1.10.

• Orora dropped to $2.61 after the bottle maker flagged earnings headwinds that could hurt the outlook for its recently purchased Saverglass business.

• Pendula has offered to buy takeover target Whispir for 57¢ per share, a 19 per cent premium on the price offered by private equity-backed Soprano Design. Whispir is up 2.9 per cent to 53¢.

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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.