Last-Minute Market Magic While Woolies Makes Peace With Workers

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Welcome to Equity Espresso’s Market Recap.

The Australian share market managed a last-minute recovery on Monday, with the S&P/ASX 200 Index closing marginally higher by 2.1 points at 8,423.0, despite spending most of the day in negative territory. Eight of eleven sectors finished in positive territory, helping offset earlier losses.

Energy (-1.05%) stocks were the day's biggest underperformers, falling 1.1% amid declining oil prices. Brent crude traded near $71.00 per barrel following Saudi Arabia's larger-than-expected price cuts for Asian markets and ongoing uncertainty surrounding Syria's political upheaval.

The Discretionary (+0.64%) sector was the day's best performer, with Breville Group (+2.91%), Aristocrat Leisure (+1.95%) and Wesfarmers (+0.72%) some of the big movers.

Woolworths Group (+1.07%) has reopened four distribution centres after the United Workers Union endorsed an enterprise agreement, ending industrial action. The new three-year agreements offer approximately 11% wage increases. The dispute has cost Woolworths around $140 million in lost sales and $50-60 million in one-off costs, impacting their H1 F25 earnings forecast.

Gold prices increased by 0.6% to nearly $2,650/oz after China's central bank reported buying 160,000 fine troy ounces in November, resuming purchases after a six-month break. As 2023's largest gold buyer, China's continued investment signals its ongoing strategy to diversify reserves despite high prices. Bitcoin remains stuck just below the six-figure mark, currenlty trading at around US$99,200

The Reserve Bank of Australia (RBA) is expected to hold rates at 4.35% at tomorrow's meeting, with markets pricing a 91% chance of no change.

Company News

• ANZ Group (-3.60%) has announced Nuno Matos will become CEO on July 3, 2025, replacing retiring Shayne Elliott, who served nine years in the role. Matos will also join ANZ's board as Executive Director.

• GQG Partners (+6.25%) has cancelled its share buyback program after uncertainties emerged regarding the U.S. tax treatment of CHESS Depositary Interests, with potential 30% withholding requirements for selling shareholders.

• Sonic Healthcare (+0.11%) has announced a €423 million ($698.5 million) acquisition of German lab group LADR. The company forecasts returns above 11% after three years.

• Superloop (+1.77%) has agreed to acquire Optus' subsidiary Uecomm for $17.5 million, gaining over 2,000km of fibre assets across major Australian cities. The deal provides access to 1,900 buildings and 50 data centres, with completion expected in early 2025.

• Platinum Asset Management (-14.35%) plunged after Regal Partners abandoned takeover discussions that began in September. Despite October's agreement to exchange financials and explore an improved offer, no deal materialised for the company.

Wall Street

The U.S. stock market showed mixed performance, with the Nasdaq (+0.8%) and S&P 500 (+0.3%) reaching record closing highs while the Dow Jones (-0.3%) declined. The positive movement was driven by optimistic forecasts from companies like Lululemon Athletica and U.S. jobs data that strengthened expectations for a Federal Reserve interest rate cut in December.

The S&P 500 marked its 57th record close of 2024, and the Nasdaq achieved its 36th record close for the year. Weekly performance varied across indices, with the Nasdaq gaining 3.3%, the S&P 500 up 1%, and the Dow down 0.6%.

The Consumer Discretionary (+2.39%) sector led gains, while revised expectations for Fed policy influenced market sentiment. Futures markets now price in a 90% probability of a 25-basis-point rate cut at the December meeting, up from 72%.

Lululemon (+15.89%) reported strong fiscal third-quarter results with net income of $352 million ($2.87 per share) and revenue of $2.40 billion, beating analyst expectations despite slowing U.S. growth. International expansion drove the 9% year-over-year sales increase, though the company remained cautious about holiday performance. DocuSign (+27.86%) shares surged after the e-signature company exceeded expectations with its third-quarter results and projected fourth-quarter revenue of $758-762 million, topping analysts' forecast of $756 million.

S&P500 Sector Performance

Economic Data

• Australian Dwelling Approvals rose 4.2% to 15,498 units in October 2024, according to seasonally adjusted estimates.

• China’s Annual Inflation rate unexpectedly edged lower to 0.2% in November 2024 from 0.3% in the previous month, missing market forecasts of 0.5% and marking the lowest figure since June.

• Japan's GDP expanded by 0.3% QoQ in Q3 2024, above flash data and market forecasts of 0.2%.

• U.S. Consumer Sentiment increased for the fifth consecutive month to 74 in December 2024, the highest level since April, compared to 71.8 in November and above forecasts of 73.

• The U.S. Economy exceeded expectations in November 2024 with 227,000 new jobs, surpassing the forecast of 200,000 and showing significant improvement from October's strike-affected gain of 36,000 jobs, impacted by Boeing labour disputes and disruptions from Hurricanes Helene and Milton.

• U.S. Private Sector jobs saw average hourly earnings climb by 13 cents (0.4%) to $35.61 in November 2024, maintaining October's growth rate and slightly exceeding market expectations of a 0.3% rise.

• Canada’s Unemployment Rate rose to 6.8% in November 2024, from 6.5% in the previous months, above expectations of 6.6% - the highest mark since September 2021.

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🌎️ Around The Globe

• Australia's financial crime agency, AUSTRAC, has launched a cryptocurrency task force to monitor crypto ATM providers' compliance with anti-money laundering laws. The initiative targets 1,200 operating crypto ATMs and 400 registered exchanges to prevent money laundering and scams.

• A U.S. judge rejected Boeing's guilty plea agreement regarding the fatal 737 Max crashes in 2018 and 2019, ruling that the proposed independent monitor should focus exclusively on competency rather than diversity requirements in overseeing the company's legal compliance.

• Eli Lilly has announced a $3 billion expansion of its Wisconsin manufacturing plant to meet high demand for its weight-loss drug Zepbound and diabetes treatments.

• OPEC+ announced on Thursday it will extend its oil production cuts into early 2025, delaying a planned increase of 300,000 barrels per day until April. The cartel's strategy aims to support falling prices, as Brent Crude has dropped 17% since July. The slower production ramp-up, now extending through 2026, will result in 800,000 fewer barrels per day than previously expected through 2025.

• A U.S. appeals court has upheld legislation that could force TikTok's sale to a non-Chinese owner by January 19, 2025, or face a nationwide ban. While TikTok plans to appeal, citing First Amendment concerns, the ruling supports government concerns about ByteDance's potential security risks.

• Waymo, Alphabet's autonomous driving unit, announced plans to expand its self-driving ride-hailing service to Miami. Vehicles will arrive in early 2025, and passenger services will launch in 2026.

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