Materials and Mining Stocks Make Strides

Good Evening,

Welcome to Equity Espresso’s Daily Recap. 

The Aussie market finished only marginally higher on Wednesday, with the ASX 200 index gaining 4.3 pts. or 0.06% to 7,519.20; however, only four of the major sectors finished in the green, with Materials (+1.31%), the biggest mover followed by Real Estate (+0.93%) and Utilities (+0.93%).

BHP Group (+1.21%) and Fortescue (+1.21%) finished higher as Iron Ore futures regained some ground on Wednesday to trade at US$133.50/t. Rio Tinto (+0.96%) ended the day higher after entering a 25-year purchase agreement with European Energy Australia to buy all the electricity from its solar farm.

Northern Star Resources (+6.0%) rose after confirming its production guidance thanks to an exceptional performance at its Kalgoorlie gold mine that offset cost headwinds.

Lithium miners rebounded after a recent sell-off, with Sayona Mining rising 10% while Liontown Resources added 3.3% to $0.94. Pilbara Minerals rose 5.8% to $3.46 as it announced plans to cut spending by as much as 10% amidst a fall in Lithium spot prices.

The biggest company news of the day was the announcement of a merger between BWP Trust and Newmark Property REIT, which sent the latter’s share price skyrocketing by 36.6%.

Nanosonics was another big mover today, but it was just in the wrong direction for shareholders as its share price lost more than 33% after it reported a miss to its sales guidance for the first half of the financial year. Kogan shares rose 14.8% after it reported a positive Adjusted EBITDA of $21.5 million during the first half of FY24, up from a loss of $4.4 million in the same half last year.

Wall Street

Another day, another all-time high for the S&P 500, which added another +0.29% on Tuesday, while the NASDAQ (+0.43%) continued its march towards its own all-time record as investors eagerly await quarterly reports from some of the largest companies over the next fortnight, including Tesla, ASML and SAP on Wednesday.

Netflix shares rose by 8.7% in after-hours trading after smashing Q4 subscriber estimates, adding 13.1 million new subscribers in the December quarter, beating estimates of 8.97 million. Netflix ended December with 260 million global subscribers.

In other company news, Verizon Communications rallied 6.7% after forecasting a strong annual profit, including posting its highest quarterly subscriber additions in nearly two years. Procter & Gamble gained 4.2% after it topped second-quarter profit expectations.

Economic Data

• The Judo Bank Australia Manufacturing PMI rose to 50.3 in January 2024 from 47.6 in the previous month, according to estimates, snapping ten months of contraction in the sector.

• Japenese Exports rose 9.8% YoY to a new record of JPY 9,648.21 billion in December 2023, beating market forecasts of 9.1%

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Quick Singles

🪃 Local News

• Woolworths CEO Brad Banducci has apologised for his handling of the decision not to sell Australia Day merchandise and has called for people to treat his team with respect following a recent increase in anger and abuse directed at staff.

🌎️ Around The Globe

• German software company SAP has unveiled a €2 billion restructuring plan covering 8,000 roles as it seeks to focus on artificial intelligence (AI)- driven business areas.

• Over the weekend, as a Boeing 757 passenger jet operated by Delta Air Lines was lining up for takeoff from Atlanta's international airport, the nose wheel popped off and rolled away, according to the Federal Aviation Administration (FAA).

• Walgreens is reportedly considering selling its pharmacy company, Shields Health Solutions, for around $4 billion.

• Macy’s has reportedly rejected an $8.5 billion take-private offer from Arkhouse Management and Brigade Capital Management, citing a "lack of compelling value."

• The Chinese government is exploring a set of actions designed to stabilise the declining stock market. Policymakers are attempting to raise approximately 2 trillion yuan (US$278 billion) mainly from the offshore accounts of Chinese state-owned enterprises. This money will be used to create a stabilisation fund to buy shares onshore via the Hong Kong exchange link.

• Canada declared a two-year limit on international student permits, stating that it would also discontinue providing work permits to some students after graduation. This decision was taken to tackle the increasing number of newcomers exacerbating the housing crisis. The cap is expected to reduce the number of approved study permits to approximately 360,000 in 2024, a 35% decrease from 2023.

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A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of January 18

👨‍💼 Director Transactions

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

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.