Good Evening,

Welcome to Equity Espresso’s Daily Recap. 

Markets ended the week on a high, buoyed by the Materials (+1.50%) sector, as Iron Ore and Lithium prices rose today. The ASX 200 index finished the day 0.7% or 52.6 pts. higher to 7,658.30. Iron Ore futures moved back closer to US$130.00/t, which helped lift market heavyweights BHP Group (+0.97%), Rio Tinto (+1.23%) and Fortescue Metals (+1.14%) higher.

Lithium miners also saw some much-needed relief today, with a lift in the spodumene prices sending Pilbara Minerals (+7.2%), Mineral Resources (+4.7%) and Liontown Resources (+11.9%) all climbing.

The Energy (+0.99%), Discretionary (+0.81%) and Technology (+0.69%) sectors were some of the other big positive movers, while Staples (-0.39%) had the largest fall of the three sectors in the red.

The Nickel sector in Western Australia received a boost today after federal resources minister Madeline King placed the metal on the government’s critical minerals list, which may mean miners will be eligible for financial support. Nickel Industries’ (+7.0%) and IGO's (+8.7%) share prices reacted positively to the news.

Some of the day’s company movers in a bother busy day of earnings reports:

• ASX Ltd. (-4.0%) reported a 7.8% drop in Underlying NPAT to $230.5 million due to technology and regulatory compliance spending.

• GQG Partners (+3.3%) rose after reporting an 18.5% lift in revenue to US$517.6 million. So far, in 2024, the company has raised US$2.9 billion in inflows.

• QBE Insurance Group (-1.7%) shares dropped after missing analysts’ estimates, reporting FY23 statutory net profit after tax of $1,355 million, compared with $587 million in FY22.

• Insurance Australia Group (-3.8%) reported a 5% drop in Net Profit After Tax to $407 million but did guide for double-digit premium growth in 2024.

• Neuren fell victim to a short seller report from U.S. company Culper Research targeting the company’s drug licensing partner Acadia. The short seller report alleges Acadia has “misrepresented” the drug’s safety and patient retention rate, saying the launch of the drug, named Daybue, had been a “total flop”.

Wall Street

On Thursday, the S&P 500 gained further ground (+0.6%), and the NASDAQ (+0.3%) and Dow Jones (+0.9%) also finished the day in the green. The unexpected downward trend in retail sales has fueled hopes that the Federal Reserve will start reducing rates in the coming months.

Cisco (-2.4%) shares dropped after it reported a fall in Q2 revenue against the prior year. The tech company also issued a lighter-than-expected forecast for Q3 and announced a downsizing plan resulting in a 5% reduction in jobs. Twillo (-15.0%) stock slumped after providing a disappointing first-quarter guidance of between $1.025 billion and $1.035 billion, down from the $1.049 billion expected by analysts.

In after-hours trading:

• Doordash (-6.8%) fell after reporting mixed results in the fourth quarter. Whilst revenue rose by 27% to $2.3 billion, losses of $0.39 per share were more than expected. Doordash said total orders grew 23% to 574 million.

• Coinbase (+3.3%) rose after it posted earnings of $1.04 during the fourth quarter, a massive swing from the expected ($1.00) per share loss. The cryptocurrency exchange reported revenue of $954 million, which was well above estimates of $822 million.

• Applied Materials (+12.0%) shares rose 11% after beating earnings estimates and providing a positive outlook. The company reported first-quarter earnings per share of $2.13, beating estimates of $1.90. Revenue was $6.71 billion, above $6.48 billion.

• Trade Desk (+19.5%) stock saw a surge after posting quarterly revenue of $606 million, which beat estimates of $582 million. The digital advertising company also forecasted that first-quarter revenue would be higher than expected.

Economic Data

• U.S. Retail Sales fell 0.8% month-on-month in January, after a 0.4% lift in December, which was also well done on forecasts of a 0.1% rise.

• U.S. Industrial Production was down 0.1% in January from the previous month, missing estimates of a 0.3% lift. Manufacturing output fell by 0.5%, compared to forecasts of a flat reading.

• The U.K. economy entered into a recession, with GDP falling 0.3% during Q4 2023 after a 0.1% drop in Q3. Services (-0.2%) fell, while exports (-2.9%) and imports (-0.8%) also declined.

• South Korea’s unemployment rate dropped to 3.0% in January, down from the 2-year high of 3.3% in December.

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Quick Singles

🌎️ Around The Globe

• Nike plans to cut about 2% of its workforce, around 1,600 jobs, in a cost-cutting effort as it forecasts weaker profits this year. The Wall Street Journal reported that the cuts were expected to start on Friday.

• Xbox will release four video game titles on external platforms but didn’t confirm which ones would be available.

• Colorado's attorney general has filed a lawsuit to block Kroger's acquisition of Albertsons, citing harm to consumers.

• Heineken's decision to increase prices last year resulted in a 5% reduction in sales volume in 2023 compared to the previous year. While the Dutch brewer managed to keep its revenue moving forward at €36.4bn (up from €31bn), its profits dropped by 4.3% to €2.3bn.

• Meta has appointed Broadcom CEO Hock Tan and philanthropist and former Enron executive John Arnold to the company’s board of directors.

• Microsoft has banned government-backed hackers from using OpenAI tools due to their association with state-sponsored hacking groups from Russia, North Korea, Iran, and China.

Markets

ASX Company Movers

Commodity Prices

Bonds

Forex

ETF Data

Global Health Check

Recommendation

A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of February 12

🗂️ Broker Ratings

1. Domain Holdings Australia (DHG) - Downgrade to Underweight from Equal-weight (Morgan Stanley)

2. Data#3 (DTL) - Downgrade to Equal-weight from Overweight (Morgan Stanley)

3. Goodman Group (GMG) - Downgrade to Neutral from Buy (UBS)

4. Origin Energy (ORG) - Downgrade to Equal-weight from Overweight (Morgan Stanley)

5. Pro Medicus (PME) - Downgrade to Sell from Hold (Bell Potter)

6. Wesfarmers (WES) - Upgrade to Neutral from Sell (Citi)

7. Wesfarmers (WES) - Downgrade to Hold from Add (Morgans)

8. Whitehaven Coal (WHC) - Upgrade to Buy from Accumulate (Ord Minnett)

👨‍💼 Director Transactions

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

DISCLAIMER: Please note that the information provided in this newsletter is for educational purposes only and should not be considered financial advice. It is not intended to encourage you to buy/sell assets or make financial decisions. We strongly recommend conducting your own research before making any investment decisions.