Good Evening,

Welcome to Equity Espresso’s Daily Recap. 

The four-day win streak ended on Wednesday with more losers than winners from some of the major companies in earnings season, dragging the market lower despite a positive night on Wall Street. The ASX 200 index started the session in the green before ending the day down by only 2.6 pts. or 0.03% to 7,660.40.

The Technology (+2.88%) sector continued its stellar run to lead the six sectors that finished the day in the green. NextDC (+13.1%) was the big mover after reporting half-year earnings after the market close on Tuesday. Xero (+4.3%) was another to finish higher. Consumer Staples (-0.81%) was the worst performer for the day, giving back positive ground it gained at the start of the week, with Woolworths (-1.69%) and Coles (-0.36%) both lower.

Australia’s Consumer Price Index (CPI) came in at 3.4% in January, slightly lower than expectations of 3.6%. January’s figure was the same as December’s. The result was viewed as a positive for markets, giving the Reserve Bank of Australia more fuel to commence rate cuts sometime this year.

Some of the sectors that saw price inflation decelerate in January vs. December included:

• New Dwelling Purchases by owner-occupiers (4.8% vs 5.1%)

• Housing (4.6% vs 5.2%)

• Health (3.9% vs 4.7%)

• Transport Prices (3.0% vs 3.6%) due to lower automotive fuel

• Recreation and Culture (-1.7% vs -2.4%).

Areas where price inflation accelerated in January vs. December included:

• Food Prices (4.4% vs 4.0%)

• Clothing and Footwear (0.4% vs -0.8%)

• Furnishings, Household Equipment & Services (0.3% vs -0.3%)

In company news:

• EML Payments (+7.7%) after increasing its Revenue by 30% to $150.7 million during the year, but did report a $12.4 million loss during the half, $9.3 million due to liquidating its Irish card services business.

• Light & Wonder (+5.9%) rose after reporting a net profit of US$180 million for 2023, a big swing from the US$176 million loss a year earlier. The gaming company reported a 16% lift in Revenue to US$2.9 billion, driven by gaming sales.

• Flight Centre (-3.9%) shares dipped despite returning to profitability, reporting a net profit of $120.2 million for the period, compared to a loss of $18.3 million a year earlier.

• Healius (-6.7%) shares fell after it reported a $636 million loss and heavy write-downs in its Pathology division.

• Perpetual (-3.3%) dropped despite reporting a rise in profits of 29% to $34.5 million for the first half of the year, along with declaring a $0.65 dividend.

Wall Street

U.S. stocks closed marginally higher on Tuesday ahead of a key week of economic data that could shape the Federal Reserve’s next interest rate move. The S&P 500 (+0.17%) rose, as did the NASDAQ (+0.37%), whilst the Dow Jones (-0.25%) fell. The first key data point is January's personal consumption expenditures (PCE) price index to drop on Thursday, which is seen as a gauge of inflation. Should the PCE reading resemble recent inflation readings on consumer and producer prices, it could compel the Fed to hold rates at current levels longer than the market is anticipating.

In company news, Norwegian Cruise Lines (+19.8%) stock price soared after it provided better-than-expected earnings guidance for the coming quarter. The cruise ship operator guided for a profit of $0.12 per share, well above the $0.20 loss expected by analysts. Unity Software (-6.1%) fell after it guided for weaker adjusted EBITDA than expected. The video game developer expects this to be between $45 million and $50 million, well done from the $113 million expected by analysts. Zoom Video (+8.0%) stock rose after posting fiscal fourth-quarter results that beat Wall Street’s expectations. Zoom earned an adjusted per-share profit of $1.22 per share on $1.15 billion in Revenue.

Economic Data

• Australia’s Consumer Price Index rose 3.4% in January, unchanged from December, and below market forecasts of a 3.6% rise, the lowest point since November 2021.

• The Reserve Bank of New Zealand held its cash rate at 5.5% for the fifth straight meeting, which was in line with market consensus.

• U.S. New Orders for Manufactured Durable Goods fell by 6.1% month-on-month in January, more than expectations of a 4.5% drop following a 0.3% rise in December.

• Nigeria's central bank delivered a 4-percentage point increase to 22.75% - its largest rate hike in absolute terms in around 17 years to tame soaring inflation.

Sponsor

Daily Curated Tech Digest
From Top Media Outlets

The AI tech landscape is evolving rapidly, with daily introductions of new tools, features, and companies.

Keeping pace with these advancements can be challenging.

Techespresso sends a daily summary of the most important AI and tech news, selected from 50+ media outlets (The Verge, Wired, Tech Crunch, etc.).

Sign up today. (one-click subscribe) ⬇️ 

Quick Singles

🌎️ Around The Globe

• BHP Group is cutting jobs in Australia as part of a restructuring of its global operations. This includes mine planning, maintenance, logistics, decarbonisation, and heritage protection.

• Guzman y Gomez has pushed back plans to list on the ASX until next year, after reporting significantly larger losses in the first six months of the year. The Mexican restaurant chain reported net losses of $3.9 million during the half - from $1.1 million in the pcp.

• Country Garden said on Wednesday a liquidation petition had been filed against it for non-payment of a $205 million loan. The Chinese property developer said it would oppose the petition filed against it by creditor Ever Credit Limited.

• The United Arab Emirates International Holding Company (IHC) has added an AI robot to its board of directors. The robot, named "Aiden Insight", will help with tasks like analysing data, assessing risks, monitoring compliance, and supporting the company.

• Apple will cancel work on its electric car, with several employees shifting to the company’s AI division.

• Microsoft is expanding its AI wings to other ventures beyond Open AI, announcing a new partnership with French start-up company Mistral AI, where it will invest $2.1 billion.

• Adidas announced on Monday that it is selling its remaining Yeezy sneakers after ending its partnership with Ye, the rapper previously known as Kanye West. The decision to sever ties with Ye was made in October 2022 due to his offensive comments, including antisemitic remarks. Adidas is now looking for a responsible way to eliminate €1.2 billion of unsold shoes.

• Google's AI research division, DeepMind, has revealed Genie, an innovative AI system capable of generating interactive video games from a simple text or image input without prior knowledge of game mechanics. The model was trained on over 200,000 hours of 2D platform game videos, enabling it to learn gameplay strategies independently/

• Forty-seven companies have pulled listing plans from the Chinese stock exchange as the regulator tightens rules on share listings.

   

Markets

ASX Company Movers

Commodity Prices

Bonds

Forex

ETF Data

Global Health Check

Partners

Your Investing Essentials

Become a more informed and better investor with the best research tools from our trusted partners.

Help support the Equity Espresso newsletter by signing up using the links below:

Trading View: The best charting platform money can buy. Used by over 50 million traders and investors around the world. Signup here

Koyfin: Our platform provides comprehensive investment research on various asset classes, such as equities, fixed income, funds, ETFs, and foreign exchange. Signup here

Tikr: A software analytics platform used to track stocks. Tikr aggregates the best investment resources into one comprehensive platform for a fraction of the price. Signup here

FinTip: An education and content-based app. that includes a competition-based game designed to engage, help and educate to make better investment decisions. Download here

Moomoo: Get a kick start on your trading journey with ten free stocks and a generous interest rate on uninvested cash. Signup here

A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of February 22

🗂️ Broker Ratings

1. Altium (ALU) - Downgrade to Neutral from Outperform (Macquarie)

2. Altium (ALU) - Downgrade to Equal-weight from Overweight (Morgan Stanley)

3. Healius (HLS) - Downgrade to Sell from Neutral (Citi)

4. PolyNovo (PNV) - Upgrade to Add from Hold (Morgans)

5. PolyNovo (PNV) - Downgrade to Hold from Buy (Bell Potter)

6. PWR Holdings (PWR) -Downgrade to Neutral from Buy (Citi)

7. Reece (REH) - Upgrade to Neutral from Sell (Citi)

8. Resimac Group (RMC) - Upgrade to Neutral from Sell (Citi)

👨‍💼 Director Transactions

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

DISCLAIMER: Please note that the information provided in this newsletter is for educational purposes only and should not be considered financial advice. It is not intended to encourage you to buy/sell assets or make financial decisions. We strongly recommend conducting your own research before making any investment decisions.