☕️ ASX Nosedives as US Recession Fears Resurface

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Welcome to Equity Espresso’s Market Recap.

Australian equities had quite the downturn on Wednesday, with the S&P/ASX 200 Index falling 1.9% to close at 7,950.5 points. This marked the worst single-day performance since August 5, with all 11 sectors declining. The broader All Ordinaries index also dropped by 2%.

The local market's slump mirrored steep losses in US markets overnight, where the S&P 500 fell 2.1% and the Nasdaq dropped 3.3%. This sell-off was triggered by weaker-than-expected US manufacturing data, reigniting fears of a potential recession in the world's largest economy. Tech stocks were particularly hard hit, with Nvidia shares plummeting 9.53%.

The Materials (-3.03%) sector was the worst performer on the day, with Fortescue (-8.48%) seeing the sharpest fall, followed by BHP Group (-2.50%) and Rio Tinto (-2.26%). Lithium miners continue to be some of the worst in the sector, with Pilbara Minerals (-6.18%) and Mineral Resources (-5.42%) continuing to freefall.

Energy (-2.99%) stocks also recorded sharp losses after Brent crude fell by almost 5% to below $US74/bbl. Woodside Energy dropped 2.5%, while Santos fell 2.6%.

Company News

• Orora (+7.20%) shares rose after the company announced it is selling its North American packaging solutions business to Veritiv for A$1.775 billion. Orora plans to invest A$130 million to expand its cans capacity in Rocklea, Queensland, which will increase overall can capacity by more than 30%.

• Cettire (-12.01%) founder and CEO Dean Mintz has increased his stake in the company by purchasing 11,436,790 shares on the open market for approximately $15.8 million. This acquisition represents 3% of the company's outstanding shares, bringing Mintz's total shareholding to

• Liontown Resources (-6.15%) says it is nearing its first shipment of spodumene concentrate from the Kathleen Valley project, scheduled for September. Since starting operations, the company has produced over 10,000 tonnes of concentrate, with an average grade of 5.2% Li2O.

• Namoi Cotton's (+2.21%) shares rose after Louis Dreyfus, a French agricultural conglomerate, received approval from Australia's Foreign Investment Review Board for its proposed takeover. Louis Dreyfus has also made its offer for Namoi Cotton unconditional, with the offer set to close on September 13.

Wall Street

U.S. stocks experienced a significant decline on Tuesday, marking the start of September on the back foot, which is traditionally a challenging month for markets.

The three major indices—the S&P 500 (-2.1%), Nasdaq (-3.3%), and Dow Jones (-1.5%)—recorded their largest daily percentage drops since early August. This downturn was influenced by subdued manufacturing data and anticipation of upcoming economic reports that could impact Federal Reserve interest rate decisions.

The "Magnificent Seven" mega-cap tech stocks, which have driven this year's market rally, experienced a significant downturn. Notably, Nvidia's (-9.53%) stock plummeted nearly 10%, resulting in a record-breaking $279 billion loss in market capitalisation. This single-day decline left Nvidia's market value at $2.65 trillion, the largest ever for a U.S. company.

Cleanspark's (-15.62%) stock dropped following its August mining update. The crypto miner reported producing 478 bitcoins, a decrease from 494 in July and 659 in August of the previous year. Vaxcyte (+36.39%) shares surged, reaching a record high, after reporting positive Phase 1/2 study results for its 31-valent pneumococcal conjugate vaccine candidate targeting adults 50 and older.

S&P500 Sector Performance

Economic Data

• Australia’s GDP grew by 0.2% QoQ in Q2 of 2024, holding steady for the third consecutive quarter, falling short of forecasts of a 0.3% rise.

• China’s General Services PMI declined to 51.6 in August 2024 from 52.1 in the previous month, below market forecasts of 52.2.

• U.S. ISM Manufacturing PMI edged higher to 47.2 in August of 2024 from the November 2023 low of 46.8 in the previous month, missing market expectations of 47.5.

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🌎️ Around The Globe

• Around 10,000 hotel workers initiated a strike over the Labor Day weekend, affecting 24 hotels across eight U.S. cities. The strike follows failed contract negotiations with major hotel chains, including Marriott, Hilton, and Hyatt.

• Cathay Pacific Airways announced that its Airbus A350 fleet will be fully operational by Saturday following repairs to 15 planes' fuel lines. The issue, stemming from an in-flight engine part failure, led to the cancellation of 45 return flights, primarily on regional Asian routes.

• Huawei has announced a product launch event scheduled for September 10th, strategically timed just hours after Apple's annual iPhone reveal. While Apple is expected to unveil its iPhone 16 lineup, Huawei's plans remain unclear, though executive Richard Yu hinted at a "leading, innovative, and disruptive product."

• Paramount Global is selling VidCon, its annual influencer and online brand convention, to London-based Informa. Founded by YouTubers John and Hank Green in 2010 and acquired by Viacom in 2018, VidCon joins Informa's portfolio of fan conventions, including Toronto Comicon.

• Vice President Kamala Harris is set to propose a significant tax deduction increase for new small businesses, offering up to $50,000 - ten times the current relief.

• Volkswagen is considering closing factories in Germany for the first time in its 87-year history as part of cost-cutting measures. The automaker is responding to increasing competition from Chinese electric vehicle manufacturers and challenging European economic conditions.

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

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