Gold Glitters While Everything Else Jitters

Good Evening,

Welcome to Equity Espresso’s Market Recap.

The Australian sharemarket experienced a broad decline on Tuesday, with the S&P/ASX 200 Index falling 1.6% to 8,214.1, despite nearly reaching its all-time high on Monday. The downturn mirrored Wall Street's performance, where the Dow Jones dropped 0.8%, and the S&P 500 fell 0.2%, ending one of its best-winning streaks since 1928.

Rate-sensitive sectors bore the brunt of the sell-off, with property stocks declining over 2%, led by Goodman Group's 2.4% drop, while the banking sector also struggled as Commonwealth Bank and other major lenders each fell by around 2%. The market-wide decline affected all 11 sectors as investors adjusted their expectations for the timing of interest rate cuts.

Healthcare (-2.43%) was the worst-performing sector on the day, with ProMedicus falling back from its all-time high price, while CSL (-2.74%) also fell back below $300 per share.

Global bond yields are rising as investors reassess expectations for U.S. interest rate cuts, with Australian 10-year yields jumping 10 basis points and similar increases in New Zealand and Japan. This sell-off reflects growing uncertainty about Fed policy amid strong US economic data, Trump's election prospects, and cautious Fed commentary.

Gold climbed to a record high of around $2,730 per ounce on Tuesday as investors sought refuge in the safe-haven commodity.

Company News

• Audinate Group (-6.18%) sank after it said it wouldn't meet its full-year gross profit target, stating that headwinds are expected to continue into the December quarter.

• Mineral Resources (-4.73%) lost ground again after yesterday’s 10%+ sell-off after an investigation uncovered managing director Chris Ellison allegedly evaded tax for years.

• Transurban (-1.81%) shares dipped despite re-affirming its FY25 divided guidance of $0.65 per share after reporting growth in daily traffic across all markets except Melbourne.

• Viva Energy (-6.32%) fell as it warned of softer retail conditions, lower tobacco sales and higher business costs.

Wall Street

U.S. markets were mixed on Monday, with the Dow Jones dropping 0.8% to 42,931.60 and the S&P 500 falling 0.18% to 5,853.98, while the Nasdaq bucked the trend with a 0.27% gain. The decline in major indexes came as Treasury yields climbed to a 12-week high of 4.17%, causing broad market weakness across most S&P 500 sectors, particularly affecting rate-sensitive areas like Real Estate, which fell 2.08%.

The market retreat followed recent record highs and six consecutive weeks of gains, with investors now turning their attention to upcoming earnings reports from 114 S&P 500 companies. While most sectors finished in negative territory, the Technology sector showed resilience thanks to Nvidia's strong performance, with the chip manufacturer rising 4.14% to a record high of $143.71.

Boeing (+3.11%) and its machinists' union have proposed a new contract featuring 35% wage increases over four years, a $7,000 signing bonus, and enhanced benefits. The deal could end the month-long strike when workers vote Wednesday.

S&P500 Sector Performance

Economic Data

• South Korea’s Producer inflation slowed to a 1% increase year-on-year in September 2024 from 1.6% a month earlier. It was the lowest figure since November 2023, primarily due to a fall in the cost of manufacturing products.

• German Producer Prices dropped 1.4% year-on-year in September 2024, slipping further from a 0.8% decrease in the previous two months. This marks the 15th consecutive period of producer deflation, driven by a sharp decline in energy prices.

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Quick Singles

🌎️ Around The Globe

• Berkshire Hathaway has increased its investment in Sirius XM Holdings, acquiring $42 million in shares over three days. The company now holds 32.5% of publicly traded stock, becoming the top shareholder after Liberty Media's recent split.

• CVS pharmacy workers at seven Southern California locations, including four in Los Angeles and three in Orange County, have launched a strike demanding improved pay, healthcare benefits, and fair contract negotiations while urging customers to respect picket lines.

• OpenAI and Microsoft are renegotiating their partnership terms as OpenAI plans to restructure as a benefit corporation and remove investor return caps. With Microsoft's $13 billion investment at stake, discussions centre on Microsoft's future ownership stake, though profitability isn't expected until 2029.

• SpaceX has secured $733.5 million in US Space Force contracts for nine launches, outbidding United Launch Alliance. The missions include seven Space Development Agency satellite launches and two National Reconnaissance Office missions, averaging $81.5 million per launch starting late 2025.

• Stripe has acquired stablecoin platform Bridge for $1.1 billion, marking crypto's largest acquisition. Following its restoration of crypto payments via USDC and partnership with Coinbase, this purchase significantly expands Stripe's cryptocurrency presence.

• Three major tobacco companies - Philip Morris, British American Tobacco, and Japan Tobacco - have agreed to pay C$32.5 billion to settle a Canadian lawsuit involving 100,000 smokers who claimed the companies concealed health risks since the 1950s.

Markets

ASX Company Movers

Commodity Prices

Bonds

Forex

Global Health Check

ETF Prices

🔍️ ETF Watch

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Australian Index

Australian Sectors

Global Indices & Sectors

Global Strategy

Property & Infrastructure

Fixed Income

Mixed Assets

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

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DISCLAIMER: Please note that the information provided in this newsletter is for educational purposes only and should not be considered financial advice. It is not intended to encourage you to buy/sell assets or make economic decisions. We strongly recommend conducting your research before making any investment.