Good Evening,

Welcome to Equity Espresso

We’re here to catch you up on the day’s stock market news in Australia and abroad.

Here’s a sample of what you may have missed today:

1. 🪨 Materials Sector Rises

2. 🏛️ Government Shutdown?

3. 🌟 Uranium Continues Surge

4. 🪙 Costco’s Golden Shopping Cart

5. 🛒 Three Companies Directors are Scooping up

The Recap

ASX200's Rise, Uranium's Radiance &
The Costco Gold Rush

It was all about Energy stocks yesterday. Today, it was the
Materials (+1.2%) sector that led the way for the ASX200 index, which finished 23.8 points or 0.38% higher to 7,048.6. Mining giants Rio Tinto (+1.0%), BHP Group (+1.2%) and Fortescue Metals (+1.3%) all finished higher.

Lithium stocks were in the spotlight today; Core Lithium's share price rocketed 19% after reporting its maiden full-year profit whilst maintaining its production outlook for FY24. Liontown fell 1.3% after reporting a 6% rise in project costs at its Kathleen Valley project. Other Lithium miners, Pilbara Minerals (+1.9%), Allkem (+2.1%), and Sayona Mining (+6.9%) also finished higher.

The Uranium price crossed $US70/Lbs, trading at heights not seen since 2011. Bannerman Energy, Boss Energy, Deep Yellow and Paladin Energy all hit 52-week highs today and continue their upward surge.

ASX-listed Uranium ETF’s URNM and ATOM also crossed yearly highs as the sector resurgence continues. Both ETFs provide global exposure to the sector, including Kazakhstan operator Kazatomprom and Canadian-based Cameco Corp.

September marks the worst-performing month to date in 2023 on the ASX200 index, losing 3.51%.

Investors of AMP, Bendigo & Adelaide Bank, Origin Energy, Perpetual and Ramsay Health Care will receive dividend cheques today, continuing the busy week of payouts.

Outlook

The S&P 500 (+0.22%) and NASDAQ (+0.33%) futures are trading higher. Investors will look to the personal consumption expenditure price index when it’s reported tonight for the latest view on inflation.

Wall Street

Wall Street rose on Thursday as treasury yields stalled ahead of next week’s key inflation data read. Investors were also watching developments in Washington to see whether U.S. lawmakers could avert a government shutdown. We look at the impacts of this shutdown later in the newsletter. The S&P 500 gained 25.19 points, or 0.59%, to 4,299.70 and the NASDAQ gained 108.43 points, or 0.83%, to 13,201.28.

The communication services sector rose 1.2%, materials increased by 1.0%, and the utilities sector sank 2.2%.

• Jefferies Financial Group stock rose more than 2% even though a slowdown in deal-making hurt the company’s third-quarter profits. Jefferies posted earnings of 22 cents per share on revenue of $1.18 billion after the market close.

• Accenture fell 5% Thursday after reporting mixed results for its fiscal fourth quarter. The company reported $2.71 in adjusted earnings per share on $15.99 billion of revenue vs. analyst expectations of $2.65 per share on $16.07 billion of revenue. The company’s full-year guidance for the upcoming fiscal year for earnings and cash from operations also came in below expectations.

• Nike reported better than expected fiscal first-quarter earnings after-hours, which overshadowed a miss on revenue, pressured by weakness in North America and an economic slowdown in its key China market. Nike stock rose 8% in after-hours trade.

Quick Singles

🪃 Local News

• There were 390,000 job vacancies in August 2023, down 38,000 or 9% from May, according to new figures from the Australian Bureau of Statistics (ABS). Worker demand has eased for a fifth straight quarter.

• Saudi Aramco purchased a $US500 million stake in Mid Ocean Energy - a Northern American company partnering with Canadian giant Brookfield in a bid for ASX-listed Origin Energy. Saudi Aramco is the largest company by market cap, with this deal with Mid Ocean representing its first investment in liquified natural gas as it seeks to diversify its business from oil.

• The Australian dollar has hit a one-year low of US63.4¢ overnight as higher oil prices and U.S. bond yields continue to push the dollar lower.

• ANZ’s banking system took an unexpected public holiday today with the Melbournites as a nationwide outage affected online banking systems, credit cards and ATMs.

🌏 Around The Globe

• Meta announced their next generation of Ray-Ban smart glasses, which will be available from October 17. In partnership with EssilorLuxottica, the glasses will let you snap a photo or live stream online from your unique point of view. They’ll start at US$299. Sorry to the Aussie readers; they’ll only be available in the U.S. to begin with.

• Costco is selling 1-ounce gold PAMP Suisse Lady Fortuna Veriscan bars for just shy of $1,900. CFO Richard Galanti said the bars had been in hot demand and sold within a few hours.

• Hyundai and Kia have issued a recall for almost 3.4 million vehicles in the United States. Owners are advised to park these vehicles outside due to the possibility of engine compartment fires.

• The Central Intelligence Agency (CIA) is developing a program that uses artificial intelligence to provide analysts with improved open-source intelligence. The agency's Open-Source Enterprise division intends to make this AI tool available to other intelligence agencies in the near future.

• HSBC is set to acquire Citigroup's China consumer wealth management business, which manages more than $3 billion in assets.

• Spotify just dropped "Jam", where up to 32 people can wrestle for the AUX cord in real-time. Perfect for those parties where your friend's questionable taste in music needs some serious intervention. Premium users get to start the chaos, but anyone can add their two cents to the mix tape.

• Snap’s AR feature popped up and vanished faster than a teenager’s attention span. On Wednesday, their ARES unit (Augmented Reality for Enterprise Services) was gone, just a few months after its grand debut.

₿ Crypto Corner

• Crypto exchange Kraken is expanding its offering into US-listed stocks and ETFs.

• Several bitcoin ETF proposals, including those from BlackRock, Valkyrie, and Bitwise, have been delayed by the Securities and Exchange Commission. This comes just days after the decision on Ark 21Shares, and GlobalX was also postponed until January. The SEC had previously delayed its decision on the fund on August 31.

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Markets

ASX200 Company Movers

Index & Commodity Prices

Bond Prices

ASX By Sector

ETF Watch

ASX News

ASX Company Announcements

Bank of Queensland (BOQ) pre-empted its full-year earnings report to be released on October 11, advising of a $79 million hit to its 2H23 statutory profit related to restructuring costs ($35m) and ME integration costs ($44m). BOQ shares finished the day 0.4% lower.

BioTrons (BIO) share price has doubled this week, with a 33% rise today to close at $0.068 per share on the back of no news. The unusual price movement got on ASX’s radar, who issued a please explain to the BioTech company. BioTron responded with a straight bat, saying it’s unaware of any information yet to be announced that would explain the spike in share price.

Bowen Coaking Coal (BCB) rose 27% after announcing it had agreed a 12-month extension of its principal loan repayment to the end of December 2025

Charter Hall Group (CHC) announced that it has appointed Anastasia Clarke as its CFO, replacing Russell Proutt, who resigned to pursue other opportunities.

Core Lithium (CXO) was today's big winner, rising 19% after reporting its first full-year profit. The lithium miner reported a net profit of $10.8 million - with sales of $50.6 million, as it produced 18,274 tonnes of spodumene concentrate during the period. FY24 forecasted production was guided to be between 80,000 - 90,000 tonnes at a cost of $1,165 - $1,250.

GR Engineering Services (GNG) rose 3.8% after announcing that it has been awarded a $155 million engineering, procurement and construction contract with Evolution Mining Limited for the Mungari Future Growth Project.

Liontown Resources (LTR) shares dropped 1.3% after the mining company lifted its cost estimates on its Kathleen Valley lithium project by 6% to $951 million.

Pantoro Resources (PNR) rose 2.8% despite reporting a Mineral Resource and Ore Reserve decrease by 3% and 7%, respectively, at its Norseman and Halls Creek Project.

Post of The Day

“ Be greedy only when others are fearful” - Warren Buffett

Deep Dive

Uncle Sam's Out-of-Office Reply

The U.S. Government is on the verge of “shutting down”. We take a look at what it all means.

The U.S. government budget is divided into 12 appropriations bills.

Each of these bills funds a different area of government operations. These bills must be passed by Congress and signed into law by the President by the end of the fiscal year, which ends on September 30.

The government will shut down if Congress fails to pass all 12 bills on time. During a shutdown, non-essential government services will not receive funding, resulting in their closure. However, essential services, which include national security, law enforcement, and air traffic control, will continue to operate.
Non-essential services like the National Park Service, Environmental Protection Agency, and Department of Housing and Urban Development will be closed, and their employees will be furloughed.

Congress is divided along partisan lines, making it difficult to agree on a budget. There is a lot of disagreement between the two parties about how much money to spend on various programs. The Biden administration has proposed several new spending initiatives, which some Republicans oppose.

Has a shutdown happened before?

There have been six partial or full government shutdowns since 1990. The most recent shutdown occurred in 2018 and lasted 35 days, making it the longest government shutdown in U.S. history.

What are the impacts?

A government shutdown can have an impact on the economy, which includes:

• Economic disruption: Lost productivity and economic growth.

• Furloughed workers: Furloughed workers lose their paychecks and may have difficulty accessing essential services.

• Reduced services: Many government services are closed or reduced during a shutdown.

Some market analysts believe the ongoing uncertainty has played some factor in the S&P 500’s poor performance during September.

A government shutdown can also cause damage to the U.S. reputation on the world stage and reduce public trust.

Insiders

Three Companies With
Director Buying & Selling

We keep tabs on the Director's buying and selling daily in our ‘A Little Extra’ section. We’ve picked out three companies that have seen several transactions post-earnings.

It’s a long-held belief that director buying is a positive sign for a company. The old saying goes, a director could be selling their shares for several reasons (Tax obligations, divorce, buying a new boat), but a director buying shares can be an indicator they are confident in the company’s prospects.

1. Santos (STO) - An oil explorer with assets in Australia and Papua Guinea who has benefited from the rising oil price, providing shareholders with returns of 16.3% p.a. in the last three years. Santos reported lower production and a 32% decline in profits in its half-year earnings during August. There has been mixed director transactions, which is heavily skewing to the down-side:

• 13/9 - Musje Werror - Buy +1,000 @ $7.72, $7,720

• 12/9 - Michael Utsler - Buy +20,000 @$7.82, $156,400

• 8/9 - Kevin Gallagher - Sell -200,000 @ $7.76, $1,552,624

• 7/9 - Kevin Gallager - Sell -400,000 @ $7.81, $3,124,662

Director Kevin Gallagher holds 1,450,000 in fully paid ordinary shares after the selling early in the month.

2. Bapcor (BAP) - It’s been a tough few years for the car parts operator as profits have fallen after a spike during the pandemic coupled with the shock departure of long-time CEO Daryl Abotomey in late 2021. Bapcor reported full-year earnings in August, where its share price rose by 5%. Since the update, we’ve seen some, albeit minor, buying of the stock by directors.

• 11/9 - Brad Soller - Buy +7,500 @ $6.67, $50,025

• 6/9 - Noel Meehan - Buy +44,642 @6.72, $299,994

• 21/8 - Kate Spargo - Buy +10,000 @ $6.49, $64,890

3. Reliance Worldwide (RWC) - directors are all on the same side of the ledger. Reliance has seen its share price reach 6-month highs of over $7.00 per share after reporting full-year earnings in August. Reliance reported sales growth of 6% after a full contribution of sales from its draining pipe system EZ-Flow, acquired part way through the prior year. Post earnings have seen the below buying:

• 18/9 - Russell Chenu - Buy +2,977 @3.80, $11,312

• 12/9 - Russell Chenu - Buy 12,023 @3.86, $46,437

• 6/9 - Darlene Knight - Buy +13,000 @ $4.02, $52,260

• 25/8 - Brad Soller - Buy +10,000 @ $4.01, $40,053

• 22/8 - Ian Rowden - Buy +15,000 @ $3.67, $54,975

Daily Quiz

Who Wins?

Yesterday’s Daily Quiz Question. Which small cap has had the best performance this month?

Answer: Aussie Broadband has seen its share price rise by over 10% during September, followed closely by EML Payments at 8.8%.

A Little Extra

📉 Going Down?

Top 10 shorted stocks on the ASX - as of September 25

1. Pilbara Minerals (PLS) - 11.78%

2. Genesis Minerals (GMD) - 9.90%

3. Flight Centre (FLT) - 9.47%

4. Syrah Resources (SYR) - 8.65%

5. Core Lithium (CXO) - 8.61%

6. Sayona Mining (SYA) - 8.39%

7. IDP Education (IEL) - 8.29%

8. Select Harvests (SHV) - 8.05%

9. Elders Limited (ELD) - 7.99%

10. Mesoblast (MSB) - 7.58%

📊Broker Ratings

What do the brokers have to say?

1. Brickworks (BKW) - Downgrade to Hold from Buy (Ord Minnett)

2. Boss Energy (BOE) - Downgrade to Neutral from Outperform (Macquarie)

3. Deterra Royalties (DRR) -Downgrade to Neutral from Outperform (Macquarie)

4. South32 (S32) - Upgrade to Buy from Neutral (Citi)

👨‍💼 Director Transactions

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

💲Dividends

Companies trading ex-dividend today

📅 Economic Calendar

Data to keep an eye on this week

DISCLAIMER: 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.