☕️ Markets Hit New Peaks - Myer's Sales Slip

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Welcome to Equity Espresso’s Market Recap.

Australian shares reached new highs, buoyed by global optimism that the US Federal Reserve will achieve a soft landing for the economy. The Fed’s bold half-point rate cut earlier this week fueled Wall Street gains.

The S&P/ASX 200 index added 0.2%, closing at a record 8,209.5 after peaking at 8246.2 intraday. It marked the sixth consecutive session of gains, with the index rising 1.3% over the week.

Eight of the 11 major sectors finished in the green, with Discretionary (+1.12%) stocks as the best performers, led by gains from Wesfarmers (+1.53%), JB Hi-Fi (+1.36%) and Harvey Norman (+1.64%).

Iron ore futures rose on Friday amid hopes of new monetary stimulus from China. However, prices were set for a weekly decline due to concerns over China’s slow recovery and increased global supply. Dalian iron ore gained 1.47%, while Singapore’s benchmark rose 0.09%.

Company News

• Bapcor (+2.19%) announced the conditional sale of MTQ Engine Systems, a diesel fuel injection and turbo aftermarket service provider. This move aligns with Bapcor's strategy to simplify operations, reduce costs, and exit non-core businesses.

• Kelsian Group's (+1.50%) US subsidiary, ACE Express Coaches, secured a one-year, $US26.5 million contract to operate Colorado's Bustang and Pegasus motorcoach transit networks. Starting November 1, 2024, the contract includes four one-year extension options and potential for significant service expansion.

• Myer (-0.57%) reported a challenging FY24, with total sales declining 2.9% to $3.2 billion. This decrease was attributed to Brisbane, Frankston, and Werribee store closures and challenging macroeconomic conditions. Despite the decline, comparable group sales saw a modest 0.4% increase. Net profit after tax fell to $52.6 million from $71.1 million the previous year, with about half of the decline due to the underperformance of Sass & bide Marcs and David Lawrence brands. Despite challenges, Myer's online sales grew 2.0% to $704.3 million, representing 21.6% of total sales.

• Namoi Cotton's (+2.10%) board unanimously endorsed Olam Agri's takeover bid of 75¢ per share, deeming it "fair and reasonable." This recommendation comes after a competitive takeover battle between global agribusiness giants Olam Agri and Louis Dreyfus.

• Regis Healthcare (+1.72%) is acquiring two Melbourne-based aged care homes from Ti Tree Operations for $35.5 million. The 262-bed facilities, operating under the Village Glen brand, boast high occupancy rates and are located strategically. The cash-funded deal, subject to regulatory approvals, is expected to be earnings accretive in FY2025.

Wall Street

U.S. stock markets rallied Thursday, with the S&P 500 and Dow Jones reaching record highs following the Federal Reserve's 50 basis point rate cut on Wednesday. The S&P 500 gained 1.70%, the Nasdaq rose 2.51%, and the Dow Jones increased by 1.26%, closing above 42,000 for the first time.

Technology stocks led the surge, with Tesla up 7.36%, Apple and Meta Platforms each gaining nearly 4%, and Nvidia jumping 3.97%. The Information Technology sector rose 3.08%, while Consumer Discretionary stocks increased 2.2%.

Nike (+7.56%) shares soared in after-hours trading after the company announced that CEO John Donahoe would step down on October 13. Elliott Hill, a long-serving Nike executive with 32 years of experience who retired in 2020, is set to return as the company's new leader. FedEx shares plunged 11.08% in after-hours trading following disappointing first-quarter results and reduced full-year revenue forecasts. The company attributed the decline to weak demand, particularly for priority services, despite ongoing cost-cutting measures.

S&P500 Sector Performance

Economic Data

• The People's Bank of China (PBoC) maintained its key lending rates at 3.35% during its September meeting, which was in line with market expectations.

• The Bank of Japan (BoJ) retained its key short-term interest rate at 0.25% during its September meeting, keeping it at the highest level since 2008, which was in line with market consensus.

• Japan’s Annual Inflation rate rose to 3.0% in August-24, from 2.8% during May - July, reaching its highest level since October 2023

• U.S. Unemployment benefits fell by 12,000 from the previous week to 219,000 during the period ending September 14, well below market expectations of 230,000 and hitting a four-month low.

• U.K Consumer Confidence fell to -20 in September from -13 in August and July, hitting its the lowest level in six months.

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🌎️ Around The Globe

• Seven independent directors of 23andMe resigned unexpectedly after CEO Anne Wojcicki said she wanted to take the genetic testing company private. The company, which went public via SPAC in 2021, has seen its share price plummet by over 95%. A special committee rejected Wojcicki's previous proposal to take the company private because it lacked a premium over the current share price.

• Alaska Airlines has completed its $1.9 billion acquisition of Hawaiian Airlines, following approval from the U.S. Department of Transportation. The deal's conditions include maintaining frequent flyer program value and preserving key routes.

• Boeing will temporarily furlough thousands of U.S. executives, managers, and staff in response to the ongoing machinist strike. CEO Kelly Ortberg cited the need to conserve cash as the reason for this decision. The strike, involving over 30,000 machinists who rejected a new labour contract, began Friday after a 96% vote in favour of the action.

• Hershey’s is collaborating with C4 Energy to create candy-flavoured fitness products. The partnership will introduce Hershey's and Reese's protein powders, Bubble Yum pre-workout supplements, and Jolly Rancher energy drinks.

• Tupperware Brands filed for bankruptcy protection, citing $1.2 billion in debt due to declining sales and failure to adapt to modern retail and online platforms. The 78-year-old company, known for its food storage containers, struggled to transition from its traditional "Tupperware parties" sales model to reach contemporary consumers.

• YouTube unveiled a suite of new AI features to support content creators, including Veo, a text-to-video generation tool for six-second Shorts, AI-powered "Inspiration" tools for brainstorming ideas and comment responses, and enhanced AI dubbing capabilities.

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