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Welcome to Equity Espresso’s Daily Recap.

The Aussie market started the day positively before an afternoon slump saw the main ASX 200 index close -0.01% or 0.5 pts. to 7,683.0 in a day dominated by today’s first-quarter inflation read, which, whilst slowing, came in hotter than expected. More on that later.

Seven of the 11 major sectors closed in the red, with Utilities (-0.59%) and Industrials (-0.55%) seeing the largest falls. Financials (+0.35%) and Consumer Staples (+0.29%) were the best performers, as the big four banks all rose, as did Coles (+0.12%) and Woolworths (+0.38%).

Australia's inflation rate was 3.6% YoY in Q1 of 2024, down from 4.1% in the prior period but above market expectations of 3.4%. This was the lowest figure since Q4 of 2021, as goods inflation eased for the sixth consecutive quarter.

Inflation moderated for most components vs. the prior quarter:

• Food (3.8% vs 4.5%)

• Alcohol & Tobacco (6.3% vs 6.6%),

• Housing (4.9% vs 6.1%)

• Health (4.1% vs 5.1%)

• Transport (3.6% vs 3.7%)

• Communication (1.8% vs 2.2%)

• Recreation & Culture (0.2% vs 0.5%)

• Insurance & Financial Services (8.2% vs 8.1%)

Inflation accelerated in these areas vs. the prior quarter:

• Cost of Education (5.2% vs 4.7%)

• Clothing (0.4% vs -1.1%)

• Furnishing & Household Services (0.2% vs 0.0%)

The trimmed mean measure of core inflation rate in Australia rose 4.0% YoY in the first quarter of 2024, down from a 4.2% increase in the previous period and was the lowest reading since the first quarter of 2022. However, the latest reading came above market forecasts of a 3.8% growth.

A busy day for company news:

• Cleanaway Waste Management (-9.97%) fell after it denied speculation by Bloomberg that Seven Group was approaching it for a takeover after climbing by over 15% on Tuesday.

• Nick Scali will enter the UK market by acquiring Anglia Home Furnishings, trading as Fabb Furniture. Nick Scali will raise up to $50.0 million to fund the deal.

• Kogan (-27.45%) shares were whacked after providing a trading update where it reported Gross Sales for the third quarter falling by 6.2% YoY to $178.3 million. Gross Profit jumped 13.8% to $39.0 million.

• Perpetual (-3.48%) shares dipped after reporting $5.2 billion in net outflows during the March quarter. Total assets under management lifted to $227.4 billion on March 31 from $213.9 billion at the end of December.

Wall Street

U.S. stocks closed higher on Tuesday following positive earnings from some of the top-tier companies, including Visa, Texas Instruments and Tesla as investors' focus turned to some of the mega-caps set to report this week.

The NASDAQ (+1.59%) was the best performer of the leading indices, followed by the S&P 500 (+1.20%) and Dow Jones (+0.69%). Ten out of 11 S&P 500 sectors finished the session higher, led by gains in Communication Services (+1.86%) and Technology (+1.71%). The Materials (-0.83%) sector finished lower, dragged by steelmaker Nucor Corp. (-8.87%), which fell after a first-quarter earnings miss.

Investors will be eyeing the release of the March Personal Consumption Expenditures (PCE) index - the Federal Reserve's preferred inflation gauge - due on Friday.

In company news:

• Spotify (+11.4%) shares rose after posting a gross profit that topped 1 billion euros (US$1.1 billion) for the first time. The streaming giant reported 97 euro cents per share for the first quarter, smashing analysts’ expectations of 65 euro cents.

• General Motors (+4.37%) shares rose after exceeding analysts’ expectations for its first-quarter results. General Motors posted adjusted earnings of $2.62 per share on revenue of $43.01 billion. Analysts had anticipated earnings of $2.15 per share and revenue of $41.92 billion.

• Tesla stock rose by over 10% in after-hours trading despite posting first-quarter earnings below analysts’ forecasts. Tesla reported adjusted earnings per share of 45 cents on $21.3 billion in revenue, while analysts anticipated 51 cents per share and $22.15 billion in revenue. 

• Visa stock rose by over 2% in after-hours trading after posting earnings of $2.51 per share in the qtr., beating estimates of $2.44 per share on revenue of $8.78 billion.

• Texas Instruments jumped 7% in after-hours trading after posting earnings of $1.20 per share on $3.66 billion in revenue, beating analysts’ expectations of $1.07 and $3.61 billion.

Some of the other major tech players to report earnings this week include Microsoft, Alphabet and Meta.

S&P500 Sector Performance

Economic Data

• U.S. Composite PMI declined to 50.9 in April from 52.1 in the previous month, signalling only a slight expansion in the country's private sector.

• Germany’s Business Climate Indicator rose to 89.4 in April, marking the third straight month of increases and beating market expectations of 88.9. Sentiment hit its highest level since May 2023.

• Italy’s Consumer Confidence fell to 95.2 in April from 96.5 in March, falling short of market expectations of a rise to 96.9 and hitting its lowest point since November.

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🌎️ Around The Globe

• According to the annual Australia Post Online Shopping Report, 9.5 million households shopped online in the past year, up 1.4 YoY, making up 82% of all households.

• Kroger and Albertsons are offloading 166 locations to C&S Wholesale Grocers to address regulators’ concerns that their proposed US$25 billion merger will lead to higher prices, store closures and job losses.

• Salesforce has reportedly backed away from talks to acquire data-management software firm Informatica after the two companies could not agree on terms.

• TikTok is one step closer to finding a new owner for its U.S. business after a bill passed in the Senate that would force the Chinese-based company to sell the business or face a ban altogether. All that’s missing is President Joe Biden's signature, who has already committed to signing the legislation.

• Apple and FIFA are reportedly close to a $1 billion deal that would give the tech company worldwide television rights for a new, month-long club tournament.

• The New York Stock Exchange is considering introducing 24-hour stock trading, aiming to mirror the trading environment of cryptocurrency markets.

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