☕️ Friday's Financial Flourish

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Welcome to Equity Espresso’s Market Recap.

The Australian share market closed higher on Friday, driven by a strong performance in the banking sector. The S&P/ASX 200 Index gained 0.4% to 8,013.4 points, with eight out of eleven sectors finishing in positive territory. The Financials (+1.45%) sector led the gains, as all four major banks saw significant increases. This rally came ahead of the release of crucial U.S. employment data, which is expected to provide insights into potential Federal Reserve interest rate decisions.

Despite the day's gains, the index recorded a 1% loss for the week, marking its first weekly decline in four weeks. Iron ore futures continued to fall in the commodities sector, approaching $US90 a tonne in Singapore, negatively impacting the Materials (-0.86%) sector. Major mining stocks such as BHP Group (-1.18%), Rio Tinto (-0.07%), and Fortescue Metals (-0.06%) all experienced slight declines. Meanwhile, oil prices fluctuated, and gold climbed above the $US2,500/oz.

Company News

• Pacific Smiles Group (-1.40%) announced the resignation of its Managing Director and CEO, Andrew Vidler. Vidler will serve a six-month notice period while the board begins the search for his replacement.

• Macmahon Holdings (-3.03%) has secured a contract with PT Citra Palu Minerals, a PT Bumi Resources Minerals Tbk subsidiary, for mining services at the Poboya gold project in Sulawesi, Indonesia. The agreement, valued at approximately US$54 million, covers open-cut mining activities, including drilling, loading, hauling, equipment maintenance, and site development.

• Woodside Energy (-3.92%) successfully raised $US2 billion ($3 billion) through a bond sale in the U.S. market. These funds are earmarked for strategic acquisitions, including a $US2.35 billion clean ammonia project in Texas and a $US900 million prospective LNG export terminal in Louisiana.

Wall Street

The benchmark S&P 500 (-0.30%) index and the Dow Jones (-0.54%) closed lower on Thursday after a volatile trading session. Initial gains sparked by optimistic economic reports were short-lived as investors focused on the crucial jobs data scheduled for release on Friday. However, the Nasdaq (+0.25%) achieved a slight gain by the closing bell.

While positive data from the Labor Department and the Institute for Supply Management briefly buoyed Wall Street, showing expansion in the services sector and declining jobless claims, the optimism wasn't sustained. Eight of the eleven S&P 500 sectors ended in negative territory, with Healthcare (-1.39%) and Industrials (-1.18%) leading the declines. Consumer Discretionary (+1.41%) stocks, bolstered by Tesla's (+4.90%) performance, bucked the trend.

JetBlue Airways (+7.16%) rose after raising its third-quarter revenue guidance. It now expects a range from -2.5% to +1% year-over-year, improving from the previous forecast of -5.5% to -1.5%. However, the airline reported a fourth-quarter loss and anticipates lower capacity in 2024. JetBlue plans to defer $2.5 billion in aircraft spending and is offering buyouts to some employees to cut costs. G-III Apparel Group's (+22.00%) shares surged after reporting better-than-expected second-quarter results. Adjusted earnings of 52 cents per share beat estimates of 27 cents, although revenue of $644.8 million slightly missed expectations. The company raised its fiscal year 2025 guidance and announced a new global apparel license for Converse.

S&P500 Sector Performance

Economic Data

• U.S. Non-Farm Payrolls are projected to add 160,000 jobs in August 2024 and more than 114,000 in July, while the Unemployment rate is expected to edge lower to 4.2% from 4.3%, which was the highest since October 2021.

• Germany's Trade Surplus narrowed to €16.8 billion in July 2024 from €20.4 billion in June, much smaller than forecasts of €21 billion.

• The U.K. House Price Index increased by 4.3% year-on-year in August 2024, the largest rise since November 2022. This follows a 2.4% rise in July and was compared to forecasts of 4.2%.

• The FAO Food Price Index edged lower to 120.7 in August 2024, the lowest in three months, from 121 in July. Cereal prices fell 0.5% to the lowest level since September 2020, mainly due to a drop in wheat export prices, reflecting sluggish international demand and strong competition amongst exporters.

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🌎️ Around The Globe

• eGenesis, a biotech company developing human-compatible organs from pigs, raised $191 million in venture funding. The company provided the genetically edited porcine kidney for a recent landmark human transplant and is preparing for FDA clinical trials.

• Lyft announced it will discontinue its standalone dockless bike and scooter services as part of a cost-cutting restructuring plan, including job cuts. This decision comes after the company, which operates Citibike in New York City and similar programs elsewhere, had previously indicated in July 2023 that it was considering options for this unit due to significant external interest.

• McDonald's is implementing further changes to its McFlurry packaging starting September 10. The plastic dome lid will be replaced with a new cardboard cup featuring four flaps to cover the top. This change follows last year's elimination of the hollow plastic spoon and aligns with the company's efforts to reduce plastic use and address environmental concerns.

• Nvidia has denied receiving a subpoena from the Department of Justice regarding antitrust concerns, contradicting earlier reports from Bloomberg. The company expressed willingness to answer regulators' questions about its business.

• Safe Superintelligence (SSI), co-founded by former OpenAI chief scientist Ilya Sutskever, has secured $1 billion in funding to develop safe AI systems exceeding human capabilities.

• Verizon is reportedly nearing a deal to acquire Frontier Communications, potentially strengthening its fibre network to better compete with rivals like AT&T. While the deal value wasn't disclosed, Frontier's market valuation was approximately $7 billion at last close.

• Volvo Cars has revised its short-term electric vehicle strategy, abandoning its goal of selling only EVs in the near future. While maintaining a long-term commitment to full electrification, the Swedish automaker aims for 90-100% of sales to be fully electric or plug-in hybrid by 2030, allowing up to 10% mild hybrid models.

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*1-year, 3-year and 5-year returns are calculated as of July 31 2024.

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