Healthcare Boom, Casino Gloom: ASX's Record-Breaking Thursday

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Welcome to Equity Espresso’s Market Recap.

The Australian sharemarket reached its second record high this week, with the S&P/ASX 200 Index closing up 37.6 points or 0.5% to 8,444.3 points on Thursday. Investor concerns over President-elect Trump's planned tariffs appear to have subsided, helping lift the ASX to its new record high.

The Healthcare (+1.61%) sector was the day’s best performer, with CSL (+1.58%) and ResMed (+1.26%). Notably, Pro Medicus (+9.05%) saw a significant jump to a new record high of $248.18 after securing its largest US deal to date - a $330 million, 10-year contract with Trinity Health, a non-profit healthcare organisation.

Financials (+0.80%) saw solid gains, lifted by the big four banks, while Insurance Australia Group (+3.91%) rose after revealing plans to acquire 90% of RACQ’s insurance underwriting business.

Company News

• AVJennings (+87.88%) has received a board-endorsed $370 million takeover bid from Proprium Capital Partners and AVID Property Group, offering shareholders 67¢ per share—double its previous trading price—plus a potential 6¢ special dividend. Shares closed at 62¢.

• Dexus (+2.72%) has sold two office properties in Pyrmont and Brisbane for a combined $443.2 million, with Dexus' share being $336.3 million. The partially occupied buildings sold at or near their book values, with the Brisbane property taking a slight 1.7% discount.

• IAG (+3.91%) has agreed to acquire 90% of RACQ's insurance underwriting business for $855 million, with an option for the remaining 10% in two years. The 25-year deal will add $1.3 billion to IAG's premium book and will be funded from existing cash reserves.

• Fisher & Paykel Healthcare (-2.31%) reported strong half-year results with revenue up 18% to NZ$951.2 million and net profit rising 43% to $153.2 million, driven by new products. The medical device maker maintained its full-year guidance of $1.9-2.0 billion in revenue.

• Pro Medicus (+9.05%) has secured its largest contract to date: a $330 million, 10-year deal with Trinity Health, a major U.S. healthcare provider operating 93 hospitals across 26 states.

• Star Entertainment (-5.95%) faced a shareholder strike, with 44.5% opposing its remuneration plan, while CEO Steve McCann appealed for patience amid ongoing financial struggles. The company reported a $27 million EBITDA loss and needs to raise $150 million to access additional loan funding.

Wall Street

Wall Street's major indexes closed lower on Wednesday before Thanksgiving, with the Nasdaq falling 0.6%, the S&P 500 dropping 0.38%, and the Dow Jones declining 0.31%. The Technology (-1.19%) sector was particularly impacted, with Dell and HP shares tumbling 12% and 6%, respectively, after disappointing quarterly forecasts.

The market downturn was influenced by concerns about the Federal Reserve's approach to interest rate cuts following strong U.S. inflation data. While traders expect a 25 basis point rate cut in December, they anticipate the Fed will maintain current rates through its January and March meetings, reflecting ongoing uncertainty about monetary policy.

Dell Technologies (-12.25%) reported mixed third-quarter results, with earnings per share of $2.15, beating estimates of $2.06 and net income rising 12% to $1.12 billion. However, revenue of $24.4 billion fell short of the expected $24.67 billion. Despite a 10% year-over-year revenue increase and positive AI sales growth, the company's shares dropped 10 following a disappointing fourth-quarter forecast. CrowdStrike (-4.59%) shares declined after the cybersecurity company provided guidance slightly below market expectations, forecasting fourth-quarter earnings per share of 84-86 cents compared to analysts' 86-cent projection.

S&P500 Sector Performance

Economic Data

• Australian Private Capital Expenditure unexpectedly grew by 1.1% QoQ in the third Q3 of 2024, exceeding market expectations of 0.9% growth and rebounding from a 2.2% contraction in the previous quarter.

• The Bank of South Korea slashed its base rate by 25bps to 3.0% at its November meeting, marking the second straight month of rate reductions and defying market consensus of a hold.

• The U.S. personal consumption expenditure price index increased 0.2% month-over-month in October 2024, the same as in September and in line with expectations. Annually, the index grew 2.3% from the prior year, in line with expectations.

• U.S. GDP expanded to an annualised 2.8% in Q3 2024, the same as in the advance estimate, down from 3.0% in Q2.

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🌎️ Around The Globe

• Databricks is reportedly raising $5-8 billion in funding, potentially valuing it at $55 billion. The private fundraising round could surpass OpenAI's as the year's largest, with the company showing no immediate IPO plans.

• Disney will pay $43 million to settle a gender pay discrimination lawsuit initiated in 2019 after an employee discovered male colleagues earned more for similar work. The settlement covers approximately 9,000 current and former female employees.

• O2 has created Daisy, a grandmotherly AI chatbot designed to waste scammers' time by engaging them in lengthy conversations. This anti-fraud tool aims to combat the $1 trillion+ lost to online scams annually, complementing O2's existing fraud prevention efforts.

• OpenAI's unreleased Sora text-to-video model was briefly leaked by beta testers protesting their treatment. The leak allowed public access to create 10-second videos through Hugging Face before being shut down, revealing a faster "turbo variant" with the model's watermark.

• Pershing Square Capital Management has acquired a $2.6-billion stake in Brookfield Corp, buying 32.7 million shares since April. This represents 2.2% of the Toronto-based company, which manages over $1 trillion in assets.

• The FTC has launched a broad antitrust investigation into Microsoft's software licensing and cloud computing practices. The probe, approved by departing Chair Lina Khan, faces uncertain outcomes amid potential leadership changes following Trump's election.

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

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