ASX Rises While "Powell Says 'Not So Fast' on Cuts

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Welcome to Equity Espresso’s Market Recap.

The Australian share market had a positive end to the week, with the ASX 200 index rising 0.74% or 61.2 pts. to close the day at 8,285.20. The gain came despite a significant sell-off on Wall Street after Federal Reserve chair Jerome Powell tapered expectations of a rate-cut in the upcoming December meeting, saying the economy was in “good-shape” and there was no need to rush further rate cuts.

It was almost a clean sweep, with 10 of the 11 sectors finishing the day in the green, led by the Utilities (+2.39%) sector, thanks to gains from Origin Energy (+2.37%) and APA Group (+2.50%). Financials (+1.46%) were another big gainer, with all four major banks making gains of more than 1.0%, with ANZ Group (+2.59%) being the best performer.

The healthcare sector (-1.76%) was the only drag on the market, with CSL (-2.48%) and Resmed (-1.69%) seeing the largest drops in the sector.

Company News

• ASX (+0.67%) has responded to ASIC's Federal Court proceedings, denying allegations that it made misleading statements about the CHESS replacement project in February 2022.

• Findi’s (+9.97%) subsidiary TSI has announced a binding agreement to acquire Tata Communications Payment Solutions Ltd for A$75.7 million, pending RBI approval. The deal will add 4,600 Indicash ATMs to Findi's network, plus a White Label ATM platform and rights to deploy 3,000 additional ATMs.

• Healius (-16.04%) shares dropped following a mixed trading update - while Pathology volumes grew 4.5% and revenues rose 5.9% year-to-date, earnings growth is constrained by increased labour costs and strategic investments. The company expects first-half 2025 Pathology EBIT to match 1H24 levels, while their Lumus Imaging division shows strong growth with exam volumes up 16% and a projected 40% EBIT increase for 1H25.

• Lendlease (+2.71%) CEO Tony Lombardo addressed shareholders at today’s AGM, maintaining current earnings guidance of 54-62¢ per security while announcing plans for a $500 million share buyback, conditional on asset sales.

• Peninsula Energy's (-25.30%) shares plunged following managing director Wayne Heili's resignation announcement and significant production cuts at its Lance uranium project. The Perth-based company revised its 2025 production forecast at the Wyoming site to 600,000 pounds, down from the previous estimate of 700,000-900,000 pounds.

Wall Street

U.S. stock markets declined on Thursday, with the Dow Jones falling 0.47%, the S&P 500 dropped 0.60%, and the Nasdaq decreased 0.64%. The downturn was primarily driven by Federal Reserve Chair Jerome Powell's comments indicating a more cautious approach to interest rate cuts, stating that with solid economic growth and above-target inflation, there was no need to rush policy easing.

Market expectations for a December rate cut diminished significantly, with CME FedWatch showing the probability dropping to 62% from 82.5% the previous day.

The Industrials (-1.69%) sector was the hardest hit among S&P 500 sectors, with notable weakness in defence stocks that had previously rallied post-election.

Disney (+6.23%) shares rose after reporting better-than-expected earnings results and outlook, with the company projecting high-single-digit adjusted earnings growth for fiscal 2025, driven by solid performance in its streaming division. Super Micro Computer (-11.41%) shares plunged, marking its fifth consecutive decline, after delaying its September quarter report filing.

S&P500 Sector Performance

Economic Data

• Chinese Retail Sales increased by 4.8% YoY in October, up from a 3.2% rise in September and beating market consensus of a 3.8% rise.

• Chinese Industrial Production expanded by 5.3% YoY in October 2024, softer than forecasts of 5.6% and slowing from September’s four-month high of 5.4%.

• Japan’s GDP rose by 0.2% QoQ in Q3 2024, down from a 0.5% increase in Q2 but was inline with market forecasts.

• U.S. Initial Jobless Claims fell by 4,000 to 217,000 during the period November 9, the lowest since May and below market expectations of a 223,000 increase.

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Quick Singles

🌎️ Around The Globe

• AMD announced a 4% reduction in its global workforce, affecting approximately 1,000 employees, as the chipmaker repositions to compete in the AI chip market dominated by Nvidia, promising support for affected staff during the transition.

• Amazon has introduced Amazon Haul, a mobile platform offering sub-$20 household items with free shipping on $25+ orders, responding to competition from Chinese retailers Temu and Shein.

• Bluesky, the decentralised social media platform, hit 15 million users with a million new signups in the past week, mainly from U.S. users following the recent presidential election.

• Liberty Media's CEO Greg Maffei will depart at year's end after his contract expires, with 83-year-old chairman John Malone stepping in as interim CEO while Maffei transitions to an advisory role.

• Wonder, a food-delivery startup, is reportedly in late-stage negotiations to acquire Grubhub from Just Eat Takeaway for under $1 billion, significantly less than the $7.8 billion Just Eat paid in 2020.

• Volkswagen and Rivian's joint venture, now valued at $5.8 billion, will officially launch on November 13. The partnership aims to develop electrical architecture and vehicle software for future models, with the first planned release in 2027.

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*1-year, 3-year and 5-year returns are calculated as of September 30 2024.

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