Worst Week Since August: Miners Stumble, IPO Fumbles

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Welcome to Equity Espresso’s Market Recap.

The Australian share market suffered its worst week since August, with the S&P/ASX 200 index dropping 0.4% to 8,296 pts. and recording a weekly decline of 1.5%.

Nine out of eleven market sectors declined, with Materials (-1.84%) stocks seeing sharp losses despite China's promises of economic stimulus. The major miners were particularly affected most, with BHP Group dropping 1.5%, Rio Tinto falling 2.8% after announcing a $US2.5 billion lithium project investment, and Fortescue declining 3.7% following a broker downgrade.

Energy (+0.44%) and Financials (+0.16%) were the sole winners on the day, WTI crude oil futures hovered around $70/bbl as forecasts of ample oil supply next year weighed on prices.

DigiCo Infrastructure REIT, the largest IPO of the year on the ASX, finished the session at $4.55 - lower than its IPO price of $5.00. DigiCo is a data centre landlord and operator that manages a $4 billion portfolio of data centres across the U.S. and Australia. It has said it will use part of the IPO proceeds to buy two large-scale adjoining data centre sites near Sydney.

ASX Company News

• Insignia Financial (+6.18%) rose after confirming it received a preliminary, non-binding takeover proposal from Bain Capital yesterday to acquire all shares for $4.00 per share.

• Iress (+8.19%) shares rose after it reaffirmed its FY24 guidance of $126m - $132m in Adjusted EBITDA - with expectations it will hit the upper end of the range.

• GPT Group (-) will acquire a 50% stake in Perth's Cockburn Gateway and Belmont Forum shopping centres for $482 million from Perron Group. The centres span 119,000 square meters, with Cockburn Gateway approved for expansion through a transformation project.

• Resolute Mining (-1.15%) shares fell on news that CEO Terry Holohan will take a leave of absence until January 31, 2025, with Chris Eger stepping in as acting CEO. The company's Syama Mine will adopt Mali's new mining code in 2025, facing increased corporate tax and fuel duty changes.

• Rio Tinto (-2.76%) will invest $2.5 billion to expand its Rincon lithium project in Argentina to 60,000 tonnes annual capacity. Construction begins mid-2025, with production starting in 2028 and full capacity expected by 2031 over a 40-year mine life.

• South32's (-1.16%) Worsley Mine Development Project received conditional approval from Western Australia's Environmental Minister following an appeal of EPA recommendations.

• Transurban (-0.93%) has received a draft In Principle Agreement from the NSW Government for Stage 2 of Toll Reform negotiations. Having invested $36 billion in Sydney's motorways, the company expects to finalise the agreement by year-end.

Wall Street

Wall Street experienced a broad decline on Thursday, with all major indexes falling: the Dow Jones dropped 0.53%, the S&P 500 fell 0.54%, and the Nasdaq decreased 0.66%. Notably, the S&P 500 marked its ninth consecutive session with more declining stocks than advancing ones, a streak not seen since 2001. Most sectors showed weakness, with Consumer Discretionary (-0.84%), Healthcare (-0.83%), and Communication Services (-0.77%) leading the downturn.

The market pullback came as investors digested mixed economic data before next week's Federal Reserve meeting. The Labor Department reported higher-than-expected producer prices for November, though service costs showed signs of moderation.

While traders are showing high confidence (over 98%) in a rate cut next week, according to CME's FedWatch Tool, several Fed officials have urged caution regarding the pace of monetary policy easing, citing continued economic resilience and suggesting a possible pause in January.

Warner Bros. Discovery (+15.43%) shares rose after it announced a significant restructuring plan on Thursday, as the company moves to organise its business into two distinct units. Adobe (-13.69%) experienced its sharpest stock decline since September 2022, despite reporting better-than-expected fourth-quarter results with adjusted earnings of $4.81 per share and revenue of $5.61 billion. The sell-off was triggered by the company's fiscal first-quarter revenue guidance of $5.63 billion to $5.68 billion, which fell short of analysts' expectations of $5.73 billion.

S&P500 Sector Performance

Economic Data

• The U.K. Consumer Confidence Index rose by 1 point to -17 in December 2024, marking the second consecutive month of improvement.

• U.S. Initial Jobless claims soared by 17,000 from the previous week to 242,000 on the first week of December, well above market expectations that they would fall to 220,000.

• U.S. Producer Price Inflation rose 0.4% month-over-month in November 2024, higher than an upwardly revised 0.3% in October and twice the market forecast of 0.2%.

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🌎️ Around The Globe

• Albertsons is suing Kroger after abandoning their proposed $25 billion merger, seeking $600 million in termination fees plus damages. The lawsuit alleges Kroger failed to adequately pursue regulatory approval for the deal, which would have created America's largest supermarket chain.

• Apple has released iOS 18.2, featuring a suite of new Apple Intelligence features like Chat GPT integration and Genmoji.

• Nike and the NFL have extended their partnership for another 10 years, building on their 12-year relationship. Nike has been the exclusive provider of uniforms and apparel for all 32 NFL teams.

• Google has unveiled Gemini 2.0, its latest AI model family, with the initial release of Gemini 2.0 Flash, the family's smallest model, now available on Google's developer platforms.

• Telehealth company Ro has partnered with Eli Lilly to offer single-dose vials of the weight-loss drug Zepbound, marking the first platform outside of Lilly's website to distribute the drug.

• SpaceX has reached a $350 billion valuation following a secondary share sale, with the company and investors agreeing to purchase $1.25 billion of insider stock at $185 per share.

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