Markets Hold Their Breath for Fed Insignia Says Thanks, But No Thanks

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Welcome to Equity Espresso’s Market Recap.

It was a mixed session on markets today as investors positioned themselves ahead of the crucial U.S. Federal Reserve interest rate decision tonight. The S&P/ASX 200 index initially showed weakness, dropping 13.20 points in early trading, but recovered throughout the day, only to fall in the red in the afternoon to close 4.6 points lower at 8,309.4, marking a 0.06% fall.

Industrials (+0.77%) and Health Care (+0.58%) were the day’s best-performing sectors, with notable performers including Transurban (+1.74%) and Computershare (+2.35%). At the same time, Pro Medicus (+2.03%) finished the day higher, while CSL (+1.37%) also rose.

The day's significant corporate news centred on Insignia Financial, which saw its shares drop after rejecting Bain Capital's takeover bid of $4 per share. Meanwhile, Qantas shares remained relatively stable, increasing 1.65% despite news of a $120 million settlement with staff over pandemic-era dismissals.

Market sentiment remains cautious as investors await the Fed's final policy meeting of the year, with expectations of a 25 basis point rate cut and a particular focus on guidance for 2025.

ASX Company News

• Clarity Pharmaceuticals' (+13.02%) shares jumped 18% after announcing a new cancer diagnosis and treatment product.

• Insignia Financial (-4.44%) has rejected a preliminary takeover proposal from Bain Capital, which sought to acquire all shares through a scheme of arrangement.

• Omni Bridgeway's (+51.30%) stock surged after announcing a deal with Ares Management, which will acquire a majority stake in over 150 co-owned investments for $310 million.

• Vulcan Energy (+2.43%) shares finished higher after signing a €879 million loan commitment with Export Finance Australia and seven commercial banks to finance its €2.2 billion Phase One Lionheart Project in Germany.

Wall Street

U.S. markets experienced a broad decline on Tuesday, with the Dow Jones (-0.61%) falling the most, followed by the S&P 500 (-0.39%) and the Nasdaq (-0.32%). Most notably, the Dow recorded its ninth consecutive daily decline, marking its longest losing streak since February 1978, despite the Nasdaq recently hitting a record high and the S&P 500 being up nearly 27% for the year.

Ten of the eleven major S&P sectors declined, with Industrials (-0.90%) leading the loses, while the Consumer Discretionary (+0.28%) sector stood as the sole gainer, boosted by Tesla's 3.6% increase. Investors are largely anticipating a 25 basis point interest rate cut from the Fed's upcoming announcement.

The market downturn came as investors adopted a cautious stance ahead of the Federal Reserve's final policy announcement of the year, even as November retail sales data exceeded expectations, indicating strong consumer spending and economic resilience.

S&P500 Sector Performance

Economic Data

• U.S. Retail Sales increased 0.7% MoM in November 2024, following an upwardly revised 0.5% rise in October and above forecasts of 0.5%.

• Japanese Exports rose by 3.8% YoY to JPY 9,152.38 billion in November 2024, accelerating from a 3.1% growth in the prior month and beating market forecasts of 2.8%

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🌎️ Around The Globe

• ASIC has launched legal action against Binance Australia Derivatives, alleging that the crypto company incorrectly classified 500 retail clients as wholesale investors, failing to provide required consumer protections, including product disclosure statements and dispute resolution access. ASIC deputy chair Sarah Court criticized Binance's "woefully inadequate" compliance systems, noting that many clients suffered significant losses after exposure to high-risk products without proper safeguards.

• Lamborghini has delayed its first electric vehicle launch to 2029, a year later than previously announced, with CEO Stephan Winkelmann stating that the luxury sports car market isn't yet ready for full electrification.

• Carlos Watson, founder of defunct startup Ozy Media, received a 116-month prison sentence for defrauding investors by fabricating financial information, audience metrics, and false partnerships with Google and Oprah Winfrey's company.

• TikTok has petitioned the Supreme Court to intervene against a new law that could force its removal from U.S. app stores by January 19, following the D.C. Appeals Court's refusal to delay enforcement.

• Chinese e-commerce app Temu maintained its position as America's most downloaded free app on Apple's App Store, followed by Instagram Threads in second place and TikTok in third. This represents a shift from 2022, when TikTok held the top position.

• The European Union has committed $11 billion to launch the IRIS² satellite constellation, consisting of 290 satellites by 2030. Managed by the SpaceRISE consortium, these medium- and low-Earth orbit satellites will provide secure internet access across Europe and coverage for dead zones.

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*1-year, 3-year and 5-year returns are calculated as of November 30 2024.

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