Chinese Data Sparks ASX Selloff

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Australian shares experienced their most significant drop in six weeks on Friday, with the S&P/ASX 200 index falling 0.9% to 8,283.2 points. This decline was primarily attributed to Chinese economic data confirming a slowdown in growth, which particularly impacted commodity stocks. Despite this setback, the index still managed a 0.8% weekly gain and has risen 9% year-to-date.

The Chinese economy grew by 0.9% in the third quarter, slightly below expectations. However, industrial production, a key indicator of commodities demand, surpassed forecasts at 5.4%. This mixed data contributed to the broad losses across all 11 sectors of the Australian market, with utilities leading the decline.

The Materials (-1.63%) sector suffered, with Iron Ore prices hovering near $US100/t after a significant overnight decline. Major mining companies such as BHP, Rio Tinto, and Fortescue all experienced losses ranging from 0.9% to 2.2%.

Company News

• APA Group (-6.28%) shares took a hit after one of its largest shareholders, Unisuper, sold $500 million worth of shares after the market close on Thursday.

• Flight Centre Travel Group (-20.44%) shares were whacked after it provided a trading update as part of a Morgans Conference Presentation. In the update, the company said that trading was “marginally” above FY24 Q1 across most key metrics, but it was too early to conclude as to likely trading patterns over the full year.

• Harvey Norman (-1.83%) fell today after revealing that it lost its case against ASIC, which claimed the company engaged in misleading and deceptive advertising practices.

• Regal Partners (-2.83%) shares fell after it was charged by South Korean regulators for breaching securities trading laws.

Wall Street

The Dow Jones (+0.37%) hit its fourth record close in five sessions, while the S&P 500 (-0.02%) and Nasdaq (+0.04%) remained flat. Strong retail sales data and Taiwan Semiconductor's upbeat forecast drove the market, with the chipmaker's shares surging and boosting the semiconductor sector. The Philadelphia SE Semiconductor index gained 1%.

Despite the Dow's gains, small-cap indexes retreated slightly, with the Russell 2000 and S&P Small Cap 600 declining after reaching nearly three-year highs the previous day. The broader market showed mixed results across sectors, with rate-sensitive areas like Utilities and Real Estate experiencing declines of 0.9% and 0.7%, respectively.

Fresh U.S. economic data confirmed healthy growth while maintaining expectations for a potential 25-basis-point rate cut at the Federal Reserve's next meeting, with an 89.4% probability, according to CME's FedWatch tool.

Taiwan Semiconductor (+9.79%), the world's largest advanced chip producer, reported a 54% increase in Q3 net profit, driven by strong A.I.-related demand. Net income reached $10.1 billion, surpassing estimates. Revenue grew 36% year-on-year to $23.5 billion.

S&P500 Sector Performance

Economic Data

• China’s GDP grew 4.6% YoY in Q3 of 2024, a tick above forecasts of 4.5% but down from Q2’s figure of 4.7%. China's economic growth slowed to its lowest annual rate since Q1 2023, hampered by ongoing property sector issues, weak domestic demand, deflation risks, and Western trade tensions.

• Chinese Retail sales rose to 3.2% YoY in September 2024, up from a 2.1% gain in August, smashing forecasts of a 2.5% rise. The latest reading marked the strongest growth in retail activity since May.

• China’s Industrial production grew by 5.4% YoY in September 2024, above forecasts of 4.6%, and accelerating from August's five-month low of 4.5%.

• U.S. Retail sales increased to 0.4% month-on-month in September 2024, well ahead of the 0.1% gain in August and slightly ahead of expectations of a 0.3% increase.

• Japan’s Annual inflation rate fell to 2.5% in September 2024, from 3.0% in August, its lowest reading since April.

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Quick Singles

🌎️ Around The Globe

• Amazon unveiled four new Kindle e-readers, including its first colour display model, the $279 Kindle Colorsoft. The lineup refresh also features an updated Kindle Scribe with AI note-taking ($399), a new Kindle Paperwhite ($159), and a 12th-generation Kindle ($109).

• AWS signed an agreement with Dominion Energy to explore developing a small modular nuclear reactor near Virginia's North Anna power station. This $500 million investment aims to meet AWS's growing clean energy needs for AI services and supports Amazon's net-zero emissions goal, following similar moves by Google and Microsoft.

• Impact Plastics and CEO Gerald O'Connor face a wrongful death lawsuit from Johnny Peterson's family. Peterson, an employee, died in Hurricane Helene's flooding in Erwin, Tennessee. The suit alleges workers were forced to stay despite known dangerous conditions, with survivors claiming they weren't allowed to leave.

• Raytheon will pay over $950 million to settle DOJ investigations into government contract fraud and FCPA violations. The company admitted to bribing a Qatari official and defrauding the Defense Department regarding Patriot missile systems and other products.

• The FTC finalised a "click-to-cancel" rule requiring companies to make subscription cancellations as easy as sign-ups. This applies to online and in-person subscriptions, aiming to save consumers time and money. Most provisions will be effective 180 days after Federal Register publication.

• Uber reportedly explored a potential bid for Expedia Group, reflecting its ambition to expand beyond ride-hailing. The interest is preliminary, with Uber approaching advisers in recent months. Notably, Uber CEO Dara Khosrowshahi previously led Expedia and remains on its board. Uber's stock has surged 80% in the past year.

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

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