Good Evening,

Welcome to Equity Espresso's Daily Recap. Not the best way to end the week after what looked like a turning point for markets. The RBA released a Monetary Policy statement today, while REA Group, owner of realestate.com.au, gave us a peak at the housing market. Let’s jump in.

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The Recap

All of the gains made earlier in the week were wiped out on Friday as the ASX200 index finished the day down 38.4 points or 0.55% to 6,976.5. For the week, the index was lower by 0.03%. Hawkish comments from U.S. Federal Chair Jerome Powell put the fear back in markets as Wall Street broke its eight-day winning streak on Thursday.

There were few places to hide today, with all 11 sectors ending the day in red. Health Care (-0.06%) was trading positively before finishing lower as CSL (+0.19%) and Sonic Healthcare (+0.26%) ended the day in the green. Utilities (-1.70%), Energy (-1.51%) and Financials (-0.95%) all ended the day in the red.

The RBA released its statement on Monetary Policy today, increasing its long-term inflation forecasts and revealing that it considered pausing rates at this past Tuesday's meeting before settling on a 25 basis point rise. The detailed statement showed that the RBA revised its trimmed mean inflation forecast for the end of 2025 from 2.8% to 2.9%. “Inflation is expected to decline more gradually than previously forecast. Inflation is forecast to decline to around 3.5 per cent by the end of 2024 and to reach a little below 3 per cent at the end of 2025,” the statement said.

REA Group reported Q1 earnings today, lifting revenue by 12% to $341m and Operating EBITDA by 13% to $198m. The rise came on the back of increased residential listings, with a 5% lift nationally, underpinned by a rebound in Melbourne (+12%) and Sydney (5%) in what the company described as a “stronger than typical” winter. REA Group had previously reported three consecutive quarters of double-digit declines (see below table). The positive momentum continued in October, reporting that the environment has stabilised now that interest rates have plateaued. October National Residential New Buy Listings were up 16% YoY, with Sydney increasing by 33% and Melbourne by 32%.

Economic Data

• U.S. Unemployment Benefits fell by 3,000 to 217,000 for the week ending November 9, reasonably close to market expectations of 218,000. Continuing claims rose by 22,000 to 1,834,000, slightly above estimates of 1,820,000.

Wall Street

The winning streak finally broke on Thursday as the S&P 500 fell 0.81% while the NASDAQ dropped by 0.91%. Federal chair Jerome Powell spoke at a monetary policy panel, stating that more work may be needed to reduce inflation. The drop in equity markets coincided with a rise in bond yields. The 10-year treasury yield rose by 12 basis points to 4.63%, while the 30-year bond rate increased by 11 basis points to 4.77%.

In earnings news, Wynn Resorts (WYNN) reported adjusted EPS that beat estimates with a record performance in North America, with Las Vegas operating revenue increasing by 14%. Affirm (AFRM) shares rose 17% after beating estimates, reporting a 28% rise in GMV to $5.6 billion with stronger demand for the company’s Buy-now-pay-later services. Unity Software (U) declined by 14% after it missed third-quarter revenue estimates and didn’t provide guidance.

Outlook

The U.K. will release key economic data overnight, including GDP, Industrial and Manufacturing Production, and Trade Balance. New Loans data from China will also be released.

Mixed signals from futures markets, with the S&P 500 (+0.05%) currently higher but the NASDAQ (-0.10%) lower.

Another round of earnings tonight, with Immunovant, Algonquin Power & Utilities and Soho House, some of the companies set to report.

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Quick Singles

🪃 Local News

• Immigration Minister Andrew Giles says that skilled migrants are needed to build new homes in Australia amidst a skills shortage.

• Australian-based cryptocurrency exchange CoinSpot has been hacked, with around $2.3million worth of Ethereum (ETH) taken from two Coinspot accounts. Coinspot has about 2.5 million customers, with more than 410 digital assets available to be traded.

• Optus CEO Kelly Bayer Rosmarin said the company will not refund customers who experienced network outages on Wednesday due to what it calls a “technical network issue”. Customers will instead be offered extra data as compensation.

🌏 Around The Globe

• Amazon has introduced a discounted One Medical membership for its Prime members at $9 per month or $99 per year.

• A second whistleblower testified before a Senate subcommittee claiming that Meta officials did not do enough to stop harm to the youngest users on its Facebook and Instagram platforms.

• Some of China’s largest e-commerce giants are in a pricing war to lure consumers to the country's “Singles Day”, with the week-long shopping bonanza kicking off on November 11.

• The Consumer Financial Protection Bureau has claimed that Citigroup intentionally discriminated against Armenian Americans when they applied for credit cards.

• Samsung has unveiled its generative AI model called Samsung Gauss, which is being used on employee productivity within the company, with plans to expand the product to other applications.

• Japan’s Eneos group spent $3.98 million in an auction to skip the queue at the Panama Canal as a logjam of ships transporting goods between the U.S. and Asia is forcing ships to spend weeks waiting at sea.

• Hollywood actors reached a tentative agreement with major studios on Wednesday to resolve the second of two strikes, with the 118-day work stoppage ending just after midnight.

• Shell is suing Greenpeace for $2.1 million in damages after activists boarded the company's oil production vessel in transit at sea this year.

Markets

ASX200 Company Movers

Index & Commodity Prices

Bond Prices

Sector

ETF Watch

ASX News

🗞️ Company Announcements

• Avita Medical (AVH) reported a 51% increase in revenue to $13.5 million. Still, Net Losses widened during the quarter to $8.7 million or $0.34 per share from $5.6 million or $0.22 per share in the same quarter last year. Avita guided for a 64% - 73% increase in revenue in the next quarter.

• Buru Energy (BRU) went into a trading halt today, pending an announcement regarding a capital raise.

• Downer EDI (DOW) announced that it had sold a 45% stake in Repurpose It, a resource recovery business based in Victoria, for $222.0 million. Downer acquired its stake for $8.5 million in 2019.

• Imugene (IMU) was 20% higher in morning trade but fell in the afternoon after it was announced that the first patient had been dosed in a Phase 1b trial using Imugenes azer-cel (CD19 CAR T cell therapy)

• Genex Power (GNX) has completed commissioning its Bouldercombe Battery Project. The project will now be able to operate at its total 50MW capacity; however, it will initially operate utilising 38 of the 40 Megapacks supplied by Tesla Motors Australia.

• Mineral Resources (MIN) will purchase Pantoro’s (PNR) lithium, nickel, copper and cobalt rights to Pantoro’s Norseman Gold project for up to $60 million plus royalties.

• News Corporation (NWS) recorded declining net income in the September quarter to $US58 million from $US66 million a year earlier, while EPS dropped to US$0.05 from US$0.07.

• Qube Holdings (QUB) provided a Q1 Trading and Business update, which was scant on actual financial detail, stating that Q1's financial performance has been solid and consistent with the company’s guidance. QUB expects to report growth in FY24, just not at the 5.6% growth rate it achieved last financial year.

• REA Group (REA) reported a double-digit lift in revenue and earnings on the back of a “stronger than typical” winter, with a 12% lift in revenue to $341 million. National listings rose by 5% after three consecutive quarters of double-digit declines.

• Southern Cross Media (SXL) confirmed reports in The Australian Financial Review that it has received a merger proposal from Australian Community Media (ACM). Southern Cross is assessing the offer and has appointed financial and legal advisors.

• Tietto Minerals (TIE) has encouraged shareholders to vote against the takeover offer proposed by Zhaojin Capital, who bid to buy all the shares of the gold miner at $0.58. The board believes the offer materially undervalues Tietto. Tietto Minerals owns the Abujar Gold Project in Côte d’Ivoire, targeting its first gold pour by the end of the. year

• Wildcat Resources (WC8) will raise $100 million via the issue of 131,578,948 new shares for $0.76, with the funds to be used for its exploration, drilling and resource evaluation at its Tabba Tabba Lithium project in Western Australia.

Social Media

 📱 Post of The Day

Friday Book Recommendation

Broker Research

Jupiter Mines

Code: JMS | Market Cap: $362.0m  | Current Price: $0.185
Price Target: $0.58 | Sector: Mining | Broker: Foster Stockbroking

Overview

Jupiter Mines is a manganese explorer with a 49.9% stake in the Tshipi Manganese mine in South Africa.

Broker Highlights

• JMS has announced it produced high-purity manganese sulfate monohydrate (HPMSM) of >99.9% purity or contains at least 32% Mn, equivalent to EV battery grade specifications.

• Jupiter said it’s on track to complete a scoping study by the end of 2023, which will shed light on the project's economics.

• The company is targeting potential locations for a commercial-scale HPMSM plant, with the U.S. and Canada as the preferred options.

Recommendation

The broker maintains a Buy rating and updates their 12-month price target to $0.58 from $0.54. It sees several catalysts, including lower freight rates, a pending scoping study, and gaining more control of Tshipi and the project's expansion.

You can access the full version of the report here.

Daily Quiz

❓️ Test Your Knowledge

Yesterday’s Question. In what year did National Australia Bank (NAB) change its name after a merger with the Commercial Banking Company of Sydney?

Answer: 1981 - The name was formed when the National Bank of Australasia, founded in 1858, merged with the Commercial Bank Company of Australia on October 1, 1981. A tricky question, with only 22% getting it right. The most popular answer was 1971.

A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of November 6

📊 Broker Ratings

What do the brokers have to say?

1. Chorus (CNU) - Upgrade to Outperform from Neutral (Macquarie)

2. Incitec Pivot (IPL) - Upgrade to Neutral from Sell (Citi)

3. Nufarm (NUF) - Downgrade to Neutral from Buy (Citi)

4. Xero (XRO) - Downgrade to Underperform from Neutral (Macquarie)

Further detailed broker ratings for Elders and Xero.

👨‍💼 Director Transactions

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

Social Channels

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LAIMER: 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.