Markets Near Record High: Bitcoin Roars, Oil Snores

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Welcome to Equity Espresso’s Market Recap.

Australian stocks rallied on Friday, with the S&P/ASX 200 index adding 0.8% to close the week at 8,295.1 points, approaching its recent record high and securing a 2.2% weekly advance—its strongest performance since mid-August. The positive momentum followed Wall Street's lead, where the S&P 500 rose 0.9% and Nasdaq jumped 1.5% after the Federal Reserve's expected quarter-point rate cut.

The local market saw broad-based gains across most sectors, with Technology (+1.76%) stocks leading the charge, helped by Life360's (+4.43%) strong performance following a UBS price target upgrade.

Energy (-0.48%) was the only sector to decline as oil prices saw modest declines on Friday. Brent crude dropped 0.6% to $75.12/bbl and WTI fell 0.8% to $71.78. The decline was driven by diminishing concerns over hurricane disruptions to Gulf of Mexico oil production, while markets remained focused on how Trump's incoming policies might affect oil supplies.

Bitcoin reached new all-time highs, nearing US$77,000 today, boosted by Trump's election victory. Investors are optimistic about Trump's pro-cryptocurrency stance, including potential regulatory changes and the potential of a federal bitcoin reserve.

Company News

• ANZ (+1.32%) posted an 8% drop in annual cash profit to $6.7 billion amid tough competition and rising loan defaults. While overdue loans jumped 47% to $4.2 billion due to higher interest rates, CEO Shayne Elliott highlighted the success of ANZ Plus, their digital platform, which grew deposits by 70% to $16 billion.

• Block (-6.06%) fell after reporting mixed third-quarter results, with revenue falling short at $5.98 billion versus expected $6.24 billion. However, the company's gross profit rose 19% to $2.25 billion, driven by Cash App's strong performance with $1.31 billion in profit.

• REA Group's (+0.46%) quarterly revenue rose 21% to $413 million, with EBITDA up 23% to $243 million, despite an $18 million hit from its unsuccessful merger attempt with UK's Rightmove. The property listing giant's earnings were impacted by the failed deal's expenses, even as the core market performed strongly.

Wall Street

Wall Street experienced a strong rally on Thursday, with multiple indices reaching record highs. The S&P 500 (+0.74%) made gains, and the Nasdaq (+1.51%) surged, achieving all-time highs for the second straight day, while the Dow Jones (-) remained flat. The positive momentum spread globally, with the MSCI world stock index climbing 0.9% to its own record high.

Meanwhile, U.S. Treasury yields pulled back, with the benchmark 10-year yield falling nine basis points to 4.3355% following Wednesday's 14 basis point increase. Similarly, the 30-year yield decreased by more than six basis points to 4.5393% after jumping 15 basis points the previous day. These market movements came as investors responded to the Federal Reserve's interest rate cut and considerations about a potential second Trump presidency.

The Federal Reserve implemented an anticipated 25 basis point interest rate cut on Thursday, with Fed Chair Jerome Powell emphasising that recent election results would not immediately affect monetary policy. Powell indicated that while inflation is approaching the Fed's 2% target and the job market has shown signs of easing; the central bank will continue to make policy decisions based on economic data to determine future rate adjustments.

Trump Media & Technology Group's (-22.97%) stock remains volatile following the presidential election results, dropping more than 20% on Thursday, effectively erasing and exceeding the previous day's 5.9% gain that had been sparked by Donald Trump's election victory. Warner Bros. Discovery (+11.81%) stock got a lift after y reported significant growth in its streaming business during the third quarter, with its Max platform adding 7.2 million global subscribers to reach a total of 110.5 million subscribers by September 30th - marking its largest quarterly subscription increase since launch.

S&P500 Sector Performance

Economic Data

• The U.S. Federal Reserve lowered the federal funds target range by 25 basis points to 4.5%-4.75% at its November 2024 meeting, following a 50 basis point cut in September, which was in line with expectations.

• The Average rate on a U.S. 30-year mortgage rose to 6.79% as of November 7th, 2024, reaching its highest level in nearly four months.

• The Bank of England lowered its Bank Rate by 25bps to 4.75% at its November meeting - inline with expectations, marking the second rate cut in four years

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🌎️ Around The Globe

• Audi unveiled a new China-specific brand identity in Shanghai, replacing its iconic four-ring logo with a simple "AUDI" text design, showcasing it on a new electric Sportback concept as part of its strategy to appeal to tech-savvy Chinese consumers amid declining sales in the region.

• Lyft has announced three strategic autonomous vehicle partnerships: with May Mobility to launch self-driving vehicles in Atlanta by 2025, with Mobileye to integrate AV-equipped vehicles into its app, and with Nexar for data sharing to enhance autonomous driving systems development.

• Perplexity A.I., a search engine startup competing with Google and OpenAI, is finalising a $500 million funding round at a $9 billion valuation, led by IVP. The company's value has skyrocketed from $500 million at the start of 2024.

• Planet Fitness is attempting to acquire Blink Holdings, challenging PureGym's recent $121 million winning bid in bankruptcy court. PureGym previously won rights to 60 of Blink's New York and New Jersey locations after the Equinox-owned budget chain filed for bankruptcy in August, having operated over 100 fitness centres.

• TikTok's Canadian operations in Toronto and Vancouver have been ordered to shut down by the federal government due to national security concerns. However, Innovation Minister François-Philippe Champagne confirmed Canadian users will still be able to access and create content on the popular video app.

• Yelp announced its $80 million acquisition of RepairPal, a car repair estimation website, with CEO Jeremy Stoppelman stating the purchase will expand the company's presence in the auto services advertising market.

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

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