Christmas Party Continues as Retailers Rise

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Welcome to Equity Espresso’s Market Recap.

Australian shares continued their upward momentum on Friday following the Christmas break, with the S&P/ASX 200 index rising 0.5% to 8,261.8 points. The market was led by strong performances in the Consumer Discretionary (+1.08%) sector, where key players like Aristocrat Leisure (+1.02%), Breville (+1.97%), and Wesfarmers (+1.38%) posted solid gains.

The Financials (+0.63%) sector also contributed to the positive sentiment, with all four big banks closing higher, led by gains in the Commonwealth Bank (+0.70%) and Westpac (+0.71%). The rally was supported by strong Boxing Day retail expectations, with shoppers forecast to spend $1.3 billion on Boxing Day and an additional $2.4 billion through the end of December.

While most sectors showed strength, with nine out of eleven posting gains, there were some notable decliners. The Utilities (-0.31%) sector dropped, dragged down by Origin Energy (-0.46%) and APA Group (-0.69%), while WiseTech (-1.59%) dragged down the Technology (-0.03%) sector, which was the sector to finish in the red.

The day's trading built upon Monday's strong performance, when the market had its best day in six months with a 1.7% gain, giving the benchmark index a return of 8.9% so far in 2024.

Brainchip Holdings (+15.87%) got a please explain from the ASX today after its share price rose by as much as 27% during the session, hitting a none-month high. Brainchip offered no explanation as to what drove its share price higher.

Wall Street

In a quiet trading session following the Christmas break, Wall Street saw minimal movement, with the S&P 500 (-0.04%) and the Nasdaq (-0.05%) both seeing small declines, while the Dow Jones (+0.06%) managed a slight gain. Rising U.S. Treasury yields, with the 10-year note reaching 4.64% - its highest level since early May - influenced market sentiment throughout the day.

The impact of these higher yields was particularly noticeable among major technology companies, with Tesla (-1.76%), Amazon (-0.87%), and Meta Platforms (-0.72%) all experiencing declines. However, Apple (+0.32%) bucked this trend, continuing its upward momentum as it approaches the unprecedented milestone of becoming the first company to achieve a $4 trillion market valuation.

Space technology company KULR Technology Group (+40.35%) purchased 217.18 Bitcoin worth $21 million, its first crypto investment since announcing plans on December 4 to allocate up to 90% of surplus cash to Bitcoin. Honda's (+4.11%) U.S.-listed shares rose following news of potential merger talks with Nissan, pushing its weekly gains above 18%.

S&P500 Sector Performance

Economic Data

• U.S. Jobless claims eased by 1,000 from the previous week to 219,000 in the second week of December, contrasting with market expectations that they would have risen to 224,000.

• The Central Bank of Turkey cut its benchmark one-week repo auction rate by 250bps to 47.5% in its December 2024 decision, ending the nine months of borrowing costs at a 14-year high.

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🌎️ Around The Globe

• The CFPB has sued Walmart and Branch Messenger for allegedly opening unauthorised deposit accounts for over a million delivery drivers since 2021, claiming the companies forced Spark Drivers to use these accounts for pay deposits under threat of job loss.

• Nippon Steel has delayed the completion of its $14.9 billion acquisition of U.S. Steel to Q1 2025, extending from the original Q3/Q4 2024 timeline. The deal, which drew opposition from the United Steelworkers union and politicians, awaits President Biden's decision on whether to block it.

• Russian Finance Minister Anton Siluanov says that domestic companies have started using bitcoin and other cryptocurrencies for international trade, following new legislation allowing their use to bypass Western sanctions.

• South Korean retail giant Shinsegae plans to form a joint venture with Alibaba International in 2025, contributing its Gmarket e-commerce platform to the partnership.

• Starbucks is experiencing a widespread strike affecting over 300 locations across 45 states, involving approximately 5,000 employees during the peak holiday season. This labour action, organised by unions, is in response to alleged unfair labour practices.

• Toyota reported a global production fall of 6.2% to 869,230 vehicles in November, marking its tenth consecutive monthly decline. While U.S. output dropped 11.8% and China production fell 1.6%, global sales increased for the second straight month due to strong demand in both U.S. and Chinese markets.

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

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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 economic decisions. We strongly recommend conducting your research before making any investment.