Grocers Up, Gaming Down: Mixed Bag Wednesday

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Welcome to Equity Espresso’s Market Recap.

The Australian share market had a modest recovery on Wednesday, with the S&P/ASX 200 Index gaining 10.3 points to close at 8,216 points. This slight uptick followed Tuesday's significant 1.7% decline, triggered by investors adjusting their expectations regarding interest rate cuts from the RBA and U.S. Federal Reserve.

Consumer Staples (+1.33%) was the day's leading sector, with supermarket giants Coles and Woolworths posting gains of 1.4% and 1.6%, respectively, despite their ongoing legal battle with the ACCC over alleged misleading promotional practices. T

Gold miners contributed to the market's positive performance as the precious metal reached a new record high above $US2,750 per ounce, driven by safe-haven demand amid geopolitical tensions in the Middle East. Notable gains were seen from Bellevue Gold (+3.2%), Genesis Minerals (+2.8%), and Perseus Mining (+1.7%), while silver also approached a 12-year high near $US35 an ounce.

Company News

• QBE Insurance (-0.41%) faces civil penalty proceedings from ASIC in Federal Court over pricing inconsistencies across multiple insurance policies from 2017 to 2022.

• Domain Holdings (-3.23%) CEO Jason Pellegrino will step down after six years at the helm.

• Michael Hill International (+9.80%) shares jumped following a positive trading result, with group same-store sales up 4% in the first 14 weeks of FY25.

• Playside Studio (-32.17%) shares plummeted after the gaming company issued a significant profit warning, forecasting FY25 EBITDA to drop dramatically to $0-5m from last year's $17.5m. Revenue is expected to remain flat at $62-68m, while cash reserves are projected to more than halve to $15-20m, signalling challenging conditions ahead of its MOUSE game launch in late 2025.

Wall Street

U.S. markets showed minimal movement on Tuesday, with the Dow Jones and S&P 500 essentially flat, falling 0.02% and 0.05%, respectively, while the Nasdaq managed a slight gain of 0.18%. The trading session was choppy as investors monitored Treasury yields, which reached their highest level since July at 4.222%, though they moderated throughout the day.

The market's performance was mixed across sectors, with Consumer Staples leading gains, up 0.92%, while the Technology sector rose 0.15%, helped by Microsoft's 2.08% increase. Investors remained focused on upcoming earnings reports and Fed policy expectations, with markets currently pricing in an 89.6% probability of a quarter-point rate cut in November.

General Motors stock surged 10% after exceeding Q3 expectations with $2.96 earnings per share on $48.76 billion revenue. Strong truck and SUV demand led to raised 2024 forecasts, though China remains challenging amid EV competition. GE Aerospace shares fell 9.05% despite beating Q3 earnings and raising full-year guidance, with analysts attributing the decline to profit-taking and production constraints from Boeing's challenges.

McDonald’s (-5.80%) stock price fell sharply in after-hours trading after the U.S. Centers for Disease Control and Prevention said an E. coli outbreak tied to the company’s Quarter Pounder burgers has resulted in the hospitalisation of 10 people and one death.

S&P500 Sector Performance

Economic Data

• South Korea's Consumer Confidence index improved to 101.7 in October 2024, up from 100 points in September.

• The International Monetary Fund (IMF) lowered its 2025 global growth forecast to 3.2%, down 0.1 percentage point from the July estimate, while leaving this year's projection unchanged at 3.2%

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Quick Singles

🌎️ Around The Globe

• Alcon Entertainment is suing Elon Musk, Tesla, and Warner Bros. Discovery for allegedly using copyrighted images from "Blade Runner 2049" to promote Tesla's Cybercab robotaxi concept despite being denied permission to use the film's imagery.

• ByteDance allegedly fired an intern for tampering with its Doubao AI model's training. However, the company disputes claims about the extent of damage caused to China's most popular ChatGPT-like chatbot.

• Disney plans to announce Bob Iger's successor as CEO in early 2026. Former Morgan Stanley CEO James Gorman will become Disney's board chair in January 2025 and lead the search for Iger's replacement after completing his tenure at the bank.

• Microsoft is introducing autonomous AI agents to Copilot and Dynamics 365, offering ten pre-built agents and custom agent creation capabilities powered by OpenAI's o1 models with enterprise-grade security features.

• Perplexity AI faces a lawsuit from Rupert Murdoch's Dow Jones and New York Post, who claim the artificial intelligence startup is engaging in widespread illegal copying of their copyrighted work. The legal action represents the latest conflict between publishers and tech companies over the unauthorised use of content to build AI systems.

• Ray-Ban Meta smart glasses have become the best-selling product in 60% of Ray-Ban stores across EMEA, leading Meta and parent company EssilorLuxottica to extend their partnership into the 2030s for future smart eyewear development.

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

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