Good Evening,

Welcome to Equity Espresso’s Daily Recap. Christmas is saved, kind of. The RBA kept rates on hold today, giving mortgage holders some relief until at least February. Gold gave back some ground while our market finished the day lower. Let’s jump in.

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The Recap

Nearly all of yesterday's gains were given back, with the ASX 200 index posting its worst one-day performance since October 20, shedding 63.1 pts. or 0.9% to close at 7,061.60.

Nine sectors finished the day lower, with Energy (-2.05%) again dragging the index lower, followed by Materials (-1.81%) and REITS (-1.42%). The Energy sector has now dropped over 16% in the last three months. Woodside Energy (-2.7%), Santos (-0.88%) and Ampol (-0.73%) all ended the day in the red.

Homeowners will breathe a sigh of relief as The Reserve Bank of Australia left the cash rate on hold at 4.35%, which was in line with almost all economists’ expectations. The RBA said,” Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks.”

The October CPI report released last week indicated that inflation is still decreasing, driven by the goods sector. However, there was no new information on service inflation in the monthly read, which we won’t get until the quarterly read in January. The RBA next meets in February 2024.

The price of gold fell sharply after hitting all-time highs on Monday, currently trading at $US2,030. Northern Star (-4.03%), Sandfire Resources (-2.99%) and Perseus Mining (-5.17%) all finished lower.

Economic Data

• The China Caixin General Service PMI increased to 51.5 in November, up from 50.4 in October, marking the sector's 11th straight month of expansion.

• U.S. Factory Orders fell 3.6% in October, slightly more than the 2.8% fall expected, which reversed a 2.3% lift in September. The drop was the largest since April 2020, indicating the industrial sector is feeling the effects of high interest rates and inflation.

• Germany’s Trade Surplus widened to €17.8 billion in October, more than expectations of €17.1 billion and an increase from €16.7 billion in September.

• South Korea’s annual CPI slowed to a 3.3% increase during November, below estimates of a 3.7% increase and last month’s figure of 3.8%.

Wall Street

U.S. stocks ended lower on Monday, interrupting the recent rally, with the NASDAQ (-0.84%) falling on the back of some of the mega-cap stocks in Microsoft (-1.4%), Apple (-0.95%) and Nvidia (-2.68%) all falling. The S&P 500 (-0.54%) also fell, while small-cap stocks continued their recent rally, with the Russell 2000 rising by over 1%

Coinbase and MicroStrategy stock gained 5.48% and 6.74%, respectively, as Bitcoin passed the $US41,000 mark to notch a 19-month high. Spotify stock rose 7.45% after the music streaming company announced it would lay off around 17% of its workforce, amounting to 1,500 jobs. Uber Technologies hit a 52-week high, rising by 2.19% after it was announced that the ride-sharing company will join the S&P 500.

Outlook

Tomorrow, we get GDP data for Q3, which is expected to decline to a 1.7% YoY rise, following a 2.1% growth in Q2. In Europe, Composite and Services PMI for November is reported in the U.K. and the Eurozone.

Over in the U.S., Non-Manufacturing employment, PMI and Price data all get reported for November, along with JOLTs job openings for October.

Some larger companies releasing earnings reports overnight in the U.S. include AutoZone, Ferguson, MongoDB, Nio, and Toll Brothers.

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Quick Singles

🪃 Local News

• Origin Energy’s largest shareholder, AustralianSuper, who has been the ringleader behind the rejected takeover offer from Brookfield, has offered to provide capital to the gas and electricity supplier.

• Westpac experienced an outage in its online banking services that started on Monday night and continued into the early hours of Tuesday morning. Thousands of customers were unable to access their online accounts. The outage occurred following a routine technology update earlier that evening.

• The Australian Federal Government has introduced a national framework for using Artificial Intelligence (AI) in classrooms. The framework, released on Friday, emphasises that A.I. should not replace teaching but rather as a tool to enhance student learning.

🌏 Around The Globe

• The launch of OpenAI's upcoming GPT Store, a marketplace for developers to sell customised versions of ChatGPT, has been postponed until 2024. After initially being planned for a November release, the company said that delay was due to “unexpected things that have been keeping us busy.” No prizes for guessing what that might be

• Pfizer’s weight loss pill is the latest failed obesity drug as several pharmaceutical companies race to enter the race and develop an alternative to Wegovy and Ozempic. Pfizer will stop developing the treatment, danuglipron after obese patients taking the drug experienced high rates of side effects in the clinical trial.

• Apple is planning to replace its credit card partner, Goldman Sachs, within the next 12-15 months, which has been marred with issues since the companies announced the partnership in 2019.

• Eleven people were arrested in Spain and Italy for running a” food fraud operation”. The group produced over 260,000 litres of olive oil sold as high-quality, but it was unfit for consumption.

• Roche has agreed to acquire Carmot Therapeutics, a developer of obesity drugs, for $2.7 billion. The move puts Roche in competition with Novo Nordisk and Eli Lilly, the dominant makers of weight-loss drugs.

• AT&T plans to use ORAN Technology for 70% of its wireless network traffic in the U.S. by late 2026 and will move from two telecom vendors to one. The open radio access network (ORAN) promises to radically cut costs for telecom operators as it uses cloud-based software and gear from many suppliers instead of relying on proprietary equipment.

• Nvidia plans to help build an AI tech-related ecosystem in Japan to meet demand in the country, which is looking to gain an edge in the artificial intelligence space.

Markets

ASX Company Movers

Commodity Prices

Bond Prices

ETF Watch

ASX News

🗞️ Company Announcements

• Capricorn Metals (CMM) shares fell -8.4% after two directors sold five million and two million shares, respectively.

• Cyclopharm (CYC) announced that Duke University Hospital has signed the first commercial contract for the use of Cyclopharm’s Technegas in the U.S.

• Evolution Mining (EVN) went into a trading halt today as it plans to raise $525 million to fund an 80% stake acquisition at the Northparkes Copper and Gold mine. The capital raise will be for $3.80 per share.

• Life360 (360) CEO Chris Hulls sold just over $6 million worth of shares, citing tax obligations.

• Mesoblast (MSB) recommenced trading today, falling by 22% after it completed its Institutional portion capital raising of $55 million at a share price of $0.30

• Unibail-Rodamco-Westfield (URW) announced the successful placement of a green bond totalling €750 million with a seven-year maturity and a 4.125% fixed coupon.

• Whisper (WSP) has received another takeover offer, this time from Sydney-based company Pendula. The offer comes following Soprano’s proposed bid at $0.48 per share. Whispir didn’t confirm how much the new bid was for but did say it was above the previously received offer and is considering it.

Social Media

 📱 Post of The Day

Broker Research

Gentrack Group

Code: GTK | Market Cap: $601.7m  | Current Price: $5.24
Price Target: $6.50 | Sector: Technology | Broker: Shaw & Partners

Overview

Gentrack Group (ASX: GTK) engages in the design, development, implementation and support of specialist software solutions for energy utilities, water companies and airports, mainly in Australia and New Zealand. Gentrack released its FY23 full-year results earlier this week.

FY23 Earnings Highlights

• Revenue of $169.9 million rose by 35% YoY and was 7% ahead of guidance, with the majority of revenue coming from Utilities ($147.9m)

  Gentrack upgraded their FY24 guidance, implying a ~19% growth prior) and EBITDA to $20.5-25.5m (vs $19-27m prior).

• Recent contract win in Saudi Arabia re-risks medium-term profitability targets.

• The broker believes that Gentrack has the best-in-class billing solution in g2.0 and that its decision to partner with Salesforce resonates with customers and works at a practical level.

Recommendation 

The broker reiterates their Buy rating and increases their price target from $4.60 to $6.50. 

You can access a full copy of the Gentrack Group Research Report here.

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A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of November 29

📊 Broker Ratings

What do the brokers have to say?

1. Beach Energy (BPT) - Upgrade to Equal-weight from Underweight (Morgan Stanley)

2. Insurance Australia Group (IAG) - Upgrade to Neutral from Sell (UBS)

3. Santos (STO) - Downgrade to Equal-weight from Overweight (Morgan Stanley)

You can access full broker commentary for Metcash, Liontown, Xero and WiseTech here.

👨‍💼 Director Transactions

What are the insiders doing? (On-market trade only)

DISCLAIMER: None of the information provided in this newsletter should be constituted as financial advice. This newsletter is strictly for educational purposes only. It should not be taken as investment advice or a solicitation to buy or sell assets or make financial decisions. Please do your research.