From Dutch Chips to Aussie Dips: Wild Wednesday

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Australian shares retreated from their record high on Wednesday, with the S&P/ASX 200 index falling 0.4% to 8,284.7 points. This decline was primarily driven by the technology sector, which mirrored global concerns about the artificial intelligence boom following disappointing earnings from Dutch chipmaker ASML. The tech sell-off was further exacerbated by news of potential US government restrictions on A.I. chip sales to certain countries.

10 sectors finished the day lower, with Technology companies faring the worst, with Wisetech Global (-2.00%) and Nuix (-5.36%) seeing some of the sharper falls. Life 360 (+2.01%) bucked the trend, hitting a new all-time high share price of $22.30

Energy stocks faced mixed fortunes, with Beach Energy (-2.01%), Origin (-1.48%), and Santos (-2.11%) experiencing losses, while Woodside rallied 0.6% on stronger full-year production guidance. The mining sector also saw declines, with Rio Tinto dropping 1.1% after lower-than-expected iron ore shipments and BHP falling by the same margin due to lower iron ore prices in China. The gold sector provided a bright spot, with Evolution Mining and Regis Resources jumping nearly 7% as gold prices hovered near record highs.

Company News

• Bank of Queensland (+6.54%) reduced its final dividend to 17¢ amid a challenging turnaround. The bank reported a 9% revenue drop to $1.6 billion, with cash earnings falling 24% to $343 million. Its home lending book contracted by $1 billion as it shifted focus to more profitable segments like business lending.

• Challenger (-4.55%) maintained its FY2025 net profit forecast of $440-480 million. Assets under management increased 1% to $128 billion in Q1, driven by strong Japanese sales. However, total life sales declined 14% to $2.4 billion during the same period.

• Evolution (+6.82%) shares rose on the back of a quarterly update, reporting performance with gold production of 193,554 ounces and copper production of 19,059 tonnes. The company maintained an industry-leading AISC of $1,569 per ounce.

• Sky City Entertainment (-2.65%) shares fell on the news that the High Court in South Australia had fined the company $13.1 million in additional casino duty.

Wall Street

Wall Street's major indexes closed lower on Tuesday, with the Nasdaq declining, falling 1.01%. The S&P 500 and Dow Jones also retreated, dropping 0.76% and 0.75%, respectively. This downturn was primarily driven by significant losses in the technology sector, particularly chip stocks, which tumbled on demand concerns.

Nvidia fell 4.7% following a report about potential AI chip export restrictions. The Philadelphia semiconductor index experienced its largest one-day drop since early September, falling 5.3%. The energy sector declined 3% as oil prices dropped.

ASML (-15.64%) shares fell after it lowered its 2025 sales forecast to €30-35 billion, citing reduced Chinese revenue expectations. Q3 net bookings fell short at €2.6 billion, though net sales beat expectations at €7.5 billion. The Dutch company anticipates that China will contribute only 20% of total revenue next year, down from 49%.

UnitedHealth shares dropped 8.1% after lowering its full-year earnings guidance to $27.50-$27.75 per share, down from $27.50-$28.00, citing ongoing impacts from a recent cyberattack. Despite this, the company still exceeded third-quarter expectations for both revenue and earnings.

S&P500 Sector Performance

Economic Data

• New Zealand’s Annual Inflation rate eased to 2.2% during the September quarter from 3.3% in the previous qtr. This was the lowest reading since March 2021, which came inline with market expectations.

• U.S. Consumer Inflation expectations for the coming year were unchanged at 3$ in September 2024.

• South Korea’s unemployment rate edged up to 2.5% in September 2024 from a one-year low of 2.4% in August.

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Quick Singles

🌎️ Around The Globe

• Adobe has launched its Firefly Video Model, introducing AI-powered video generation tools. The suite includes Generative Extend in Premiere Pro, allowing users to extend footage by up to two seconds and make mid-shot adjustments.

• Bath and Body Works has removed a winter-themed candle called "Snowed In" from sale after widespread criticism on social media. The candle's label, featuring a stylised paper snowflake, was compared to a Ku Klux Klan hood. The company stated the design was unintentional and pulled the product from its website and retail locations.

• Google announced plans to purchase power from Kairos Power's small modular reactors (SMRs), with the first unit expected to be online by 2030. This move reflects a growing trend among tech companies to use nuclear energy to meet data centres' increasing power demands.

• Tesla reportedly used remote human operators to control some functions of its Optimus robot prototypes during a recent investor showcase event near Los Angeles. While the robots could walk autonomously using AI, many interactions with attendees were overseen by off-site employees.

• True Value, a national hardware retailer with a 70-year history, has filed for Chapter 11 bankruptcy protection. The Chicago-based company announced plans to sell most of its assets to competitor Do it Best.

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

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