Good Evening,

Welcome to Equity Espresso

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

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

1. ⚙️ Sims Earnings Slip

2. 💵 Woollies Cash Cutback

3. 🤝 G20's Aussie-Euro Talks

4. 📊 Key Economic Data This Week

5. 💻 Tech Takeover: Atturra Acquires Cirrus

The Recap

Chevron Initiates Arbitration
Amidst WA LNG Plant Strikes

The ASX200 broke a four-day losing streak, ending Monday 35.6pts. higher to 7,192.3. The Financials (+1.27%) and Staples (+0.93%) rose, leading the way for the seven sectors to finish higher. The big four banks, along with Macquarie, all ended the day in the green. Health Care (-0.7%) fell most of the sectors that finished in the red, with CSL, Cochlear and Sonic Healthcare ending the day lower.

The AFR reported today that Chevron plans to initiate enforced arbitration with the unions at its two large Western Australian LNG plants. This comes after negotiations reached a stalemate and weeks of escalating strikes, which the company claims threaten the state's gas supply. On Monday, the U.S. energy giant will apply for an intractable bargaining declaration for Gorgon and Wheatstone LNG workers. This follows a similar application made last week for the offshore Wheatstone gas platform, where labour costs could increase by 49% if the unions' demands are met.

It’s a busy week for global economic data.

• U.S. Inflation - The market expects the overall CPI to rise by 3.6% year-on-year in August, but due to the slowdown in service industry employment, core CPI is estimated to slow down to 4.3% year-on-year in August. Traders are betting that the Federal Reserve will keep rates at current levels when it meets on September 19. However, traders are pricing in a more divided 53.5% chance for another pause at the November meeting, according to the CME group's FedWatch Tool.

• Over in Europe, the ECB will meet this Thursday to decide whether it will raise interest rates as it deals with weak economic data in the Eurozone. Preliminary PMI fell to 47 for August, down for three consecutive months.

• China releases retail sales year-on-year growth figures for August, which are expected to come in at 2.8% after a 2.5% read in July.

ASX200 Stock Snapshot

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Quick Singles

🪃 Local News

• Woolworths has announced changes to its cash withdrawal policies due to customer behaviour and security concerns. Starting in mid-September 2023, the cash withdrawal limit per transaction in stores will be reduced from $500 to $200. Furthermore, by the end of October, customers can only withdraw cash if they make a purchase.

• Liontown has agreed to the terms of a non-disclosure and exclusivity agreement with Albemarle. Albemarle will begin its due diligence shortly in preparation for the proposed $6.6 billion takeover. It is anticipated that Albemarle's due diligence process will take around four weeks.

• Former Northern Star chief explorer Jason Boladeras has been appointed as the new exploration manager for WA gold miner Westar Star Resources. Boladeras will assume the role from September 26.

• The shares of Reece Pharmaceuticals declined by 20% following the completion of their $8 million share placement, which was priced at 44 cents per share. This was around 30% lower than Friday’s share price. The drug development company plans to allocate approximately $6 million towards financing clinical trials for their blood infection treatments.

🌏 Around The Globe

• Roku plans to lay off 10% of its workforce, cutting more than 300 staffers, as the streaming platform company seeks to control costs.

• Arm Holdings is evaluating the possibility of increasing the price range of its IPO due to high demand, with subscriptions reaching six times the expected amount. Arm aims to raise up to $4.87 billion by offering 95.5 million American depositary shares between $47 to $51 per share.

• General Motors offered the United Auto Workers (UAW) union a pay rise of 16% for top wage earners and 56% for newer employees. However, the UAW rejected the offer, calling it "insulting".

• Intuit has introduced a new AI assistant called "Intuit Assist," which offers financial guidance and helps make personalised recommendations using its software. The AI assistant uses GenOS, which is a personalised language model platform. This feature is now accessible to all TurboTax customers and some users of Intuit's other products.

• GM-backed Cruise is “just days away” from regulatory approval to begin mass production of its fully autonomous vehicle without a steering wheel or pedals.

• ChatGPT experienced a decline in monthly website visits for the third consecutive month in August. The visits decreased by 3.2% to 1.43 billion after experiencing drops of approximately 10% in the preceding two months.

₿ Crypto Corner

• Thodex CEO Faruk Faith Ozer received an 11,000-year jail sentence for the $2 billion collapse of the Turkish crypto company. He was found guilty of aggravated fraud, leading a criminal organisation, and money laundering.

• Rumours are circulating that FTX has been granted permission to sell off its assets from September 13. In April, the crypto exchange held $3.4 billion worth of crypto, as it intends to sell up to $200 million in crypto each week.

Markets

Index & Commodity Prices

Bond Prices

ASX By Sector

ETF Watch

Recommendation

Movers and Shakers

✅ Biggest Gainers

Syrah Resources shares rose 7.0% as the graphite producer announced that it had obtained an additional US$150 million ($A234.6 million) in funding for its Balama operation in Mozambique. The conditional loan was granted to Twigg Exploration and Mining, a wholly-owned subsidiary of Syrah, by the United States International Development Finance Corporation.

The primary purpose of the loan is to finance feasibility studies for the development of Balama's vanadium resource and a potential expansion of the site's tailings storage facility.

Syrah Resources also reported its half-year accounts today, reporting an after-tax loss of $US38.6 million compared to a $US9.9 million loss a year earlier. Revenue from sales of natural graphite fell to $US28.4 million from $US49.7 million in 2022’s same half.

Cirrus Networks jumped 29.3% to $0.053 after IT service provider Atturra announced it would acquire them in a transaction totalling $49.3 million - a 30% premium to Cirrus’ share price on Friday. Cirrus shareholders will receive a mix of cash (75%) & Atturra shares (25%) as part of the deal.

Aturra will fund the acquisition through new shares and debt financing.

Atturra provides technology services in Australia, including advisory and consulting, business application and cloud solutions. It is currently valued at $206.9 million, with its share price rising 2.8% on the news.

🔻Biggest Fallers

Sims (SGM) provided a trading update today, flagging ongoing pricing and demand challenges impacting its quarterly profits. Due to these challenges, the company predicts breaking even in the first quarter of fiscal year 2024.

According to the update, steel demand is low, and the scrap prices are not high enough to encourage a robust supply. The company notes that weak market conditions continue to persist. Additionally, the previously strong U.S. domestic market is beginning to show signs of weakening.

The Sims share price ended the day down 10.6% to $13.79.

Tietto Minerals’ (TIE) share price fell 9.4% after it retracted two announcements it released last week relating to the company’s production outlook.

Tietto retracted both statements as they contained a seven-year production schedule based upon an updated 2023 resource model that has not been released to the market. Therefore, Tietto did not have a reasonable basis for making the statements.

Tietto said it anticipates that the whole Life of Mine (LOM) and updated Reserves statement will be released at the end of September 2023.

Post of The Day

Deep Dive

Australia's Trade Tango with the EU

The G20 meeting is a gathering of the 20 top economies in the world, providing a forum for international economic cooperation and decision-making. Its primary purpose is to unite the leading advanced and emerging economies around the globe to discuss and enhance global financial stability.

At the recent G20 summit in New Delhi, India, Australian Prime Minister Anthony Albanese had discussions with European leaders, primarily focusing on the Australia-EU Free Trade Agreement.

Australia-EU Free Trade Agreement

• Anthony Albanese held separate talks with European Commission president Ursula von der Leyen, French President Emmanuel Macron, and German Chancellor Olaf Scholz.

• The primary focus was the Australia-EU Free Trade Agreement, with Albanese emphasising that Australia won't sign an agreement for the sake of it. He believes trade must be mutually beneficial and serve Australia's and the EU's interests.

• There's a push to finalise the deal by the end of the year. If not, the momentum might be lost due to the upcoming EU elections in 2024.

• Negotiations have faced hurdles, especially concerning geographical indicators for prosecco, feta, and parmesan products. The EU wants Australia to adopt naming conventions similar to those for champagne. In return, Australia seeks to increase exports like beef and lamb to the European market.

• A potential compromise could involve labelling products as “Australian-style parmesan” and introducing grandfathering arrangements for existing producers.

Trade Implications and Stakes

• Trade is crucial for Australia, with one in four Australian jobs dependent on it. The Prime Minister emphasised the importance of Australia's representation in global economic discussions.

• The E.U. was Australia's second-largest trading partner in 2020. It's also a significant source of foreign investment and a crucial market for services

• Australia believes it has leverage in the negotiations due to Europe's demand for Australian critical minerals essential for clean energy technologies.

The G20 summit also addressed global issues, including the Russian invasion of Ukraine. The leaders issued a declaration urging all states to refrain from threats and highlighting the devastating impact of the war on Ukraine and the global economy.

Albanese welcomed the G20's strong consensus against Russia's actions in Ukraine, emphasising the international community's united stance.

Daily Quiz

Test Your Knowledge

A History Lesson

Yesterday’s Daily Quiz Question: The share price of this Lithium small cap plummeted by more than 50% after the Mali government paused Direct shipping Ore

Answer: Leo Lithium. An easier one if you were following the news last week. The most popular answer, with 35% of you getting it correct.

Leo Lithium’s share price fell by over 50% last Monday as Mali halted the miner’s plans to ship its first ore.

A Little Extra

📉 Going Down?

Top 10 shorted stocks on the ASX - as of September 5

1. Flight Centre (FLT) - 10.37%

2. Pilbara Resources (PLS) - 9.75%

3. Syrah Resources (SYR) - 9.43%

4. Elders Limited (ELD) - 9.05%

5. IDP Education (IEL) - 8.68%

6. Brainchip (BRN) - 7.45%

7. Mesoblast (MSB) - 7.30%

8. Select Harvests (SHV) - 7.29%

9. Core Lithium (CXO) - 7.27%

10. Appen (APX) - 7.25%

📊Broker Ratings

What do the brokers have to say?

1. Capricorn Metals - Bell Potter raised its price target to $5.20. Maintains a buy rating.

2. Domino’s Pizza - Citi raises its price target to $57.95. Maintains a Neutral rating.

👨‍💼 Director Transactions

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

💲Dividends

Companies trading ex-dividend today

1. Chorus Ltd (CNU)

2. CSL Ltd (CSL)

3. HUB24 Ltd (HUB)

4. L1 Long Short Fund Ltd (LSF)

5. LGI Ltd (LGI)

6. National Australia Bank Ltd (NABPE)

7. Pepper Money Ltd (PPM)

8. Qualitas Ltd (QAL)

9. Step One Clothing Ltd (STP)

10. Terracom Ltd (TER)

11. Universal Store Holdings Ltd (UNI)

📅 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.