Materials Sector Rebounds, Orora Plunges, Mesoblast Surges

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Welcome to Equity Espresso’s Daily Recap. We hope everyone enjoyed their extra long weekend.

The Aussie market spent most of the day in positive territory, before an afternoon dip saw the ASX 200 index end the day 9pts. or 0.1% lower to 7,887.90. The drop followed a mix-lead from Wall Street overnight which saw the S&P500 and Dow Jones end lower but the NASDAQ rise.

Eight sectors finished the session lower, with Telco. (-0.97%), Health Care (-0.94%) and Real Estate (-0.92%) seeing the largest falls. The Materials (+1.08%) sector rebounded after Iron ore bounced back above US$100/t. BHP Group (+1.94%) and Rio Tinto (+0.68%) both rose, whilst Fortescue (-1.09%) lost ground. Gold miners had a positive day as the precious metal rose on Monday to trade at a record high above US$2,250/oz. Northern Star Resources (+2.56%), Evolution Mining (+5.87%) and De Grey Mining (+3.95%) were some of the bigger movers on the day.

In company news, Orora (-14.7%) shares plunged as it revised its earnings forecast for FY24 amid weaker product demand. The bottle maker said earnings for the current year will be between $307 million and $317 million—down from $320.5 million in FY23. These forecasted earnings exclude French company Saverglass, which Orora acquired in October 2023.

On the positive side of the ledger, Austal (+10.5%) shares rose after it received a takeover offer from South Korean company Hanwha Ocean at $2.825 per share. Austal’s board said it was not satisfied” that the approvals were needed for the deal to proceed. Paladin Energy (+4.7%) shares climbed after confirming it had produced its first load of uranium from its Langer Heinrich mine. Mesoblast (+71.1%) was the big mover today after the U.S. Food & Drug Administration said the data from a phase three trial of the company’s Ryoncil product was sufficient to re-submit the Biologics Licence Application.

Wall Street

The Dow Jones (-0.60%) and S&P 500 (-0.20%) closed lower on Monday after better-than-expected manufacturing data in the U.S. pushed treasury yields higher. On the other hand, the NASDAQ (+0.11%) edged up marginally thanks to a rise in semiconductor stocks, with the sector gaining 1.2%

According to the CME's FedWatch tool, the U.S. rate futures market is pricing in a 58% chance of a rate cut in June, down from about 64% a week ago.

Eight of the 11 major sectors on the S&P500 finished the day lower, with Real Estate (-1.77%) and Health Care (-0.88%) the hardest hit, while Communication Services (+1.46%) was the best performer.

In company news, semiconductor manufacturer Semtech (+6.8%) shares rose after reporting fourth-quarter revenue of $192.9 million, which was higher than expectations of $190.7 million. AT&T (-0.6%) shares dipped after the telco. provider said it was investigating a data leak, with a preliminary review revealing that data of seven million customers had been published on the dark web.

S&P500 Sector Performance

Economic Data

• The U.S. ISM Manufacturing PMI increased to 50.3 in March, up from 47.8 in February and ahead of expectations of 48.4. The reading was the first expansion in the sector in 16 months.

• U.S. GDP in Q4 2023 rose by 3.4%, slightly above the 3.2% previously reported, supported by consumer spending and non-residential business investments.

• U.S. Jobless Claims fell by 2,000 to 210,000 for the week ending March 23rd, beating market expectations of 215,000.

• China’s NBS Manufacturing PMI rose to 50.8 in March, from 49.1 a month earlier, above forecasts of 49.9 and the first growth in factory activity in six months.

• China’s NBS Non-Manufacturing PMI rose to 53.0 in March from 51.4 a month earlier, marking 15 consecutive months of expansion in the services sector.

• South Korea’s exports increased by 3.1% from a year earlier to a three-month high of US$56.5 billion in March, below market forecasts of a 5.2% rise.

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Quick Singles

🌎️ Around The Globe

• BHP’s top economist and vice-president Huw McKay has lashed out against the Chinese government, blaming ideologically driven leaders for mismanaging China’s recovery from the COVID-19 pandemic.

• Home Depot announced last week that it had agreed to buy SRS Distribution Inc., a building products provider, for about $18.25 billion.

• Million Dollar Baby - South Korean businesses are reportedly offering workers $75,000 bonuses for each baby they have as the country faces a population growth crisis.

• Neoen plans to sell 30% of its Australian business to raise funds to accelerate the expansion of its wind, solar, and storage plants.

• OpenAI announced a new AI-based audio cloning tool called Voice Engine on Friday. The company says it's allowed a small number of businesses to test the tool, which can recreate a person's voice from just a 15-second recording.

• Philanthropist, Altruist, Criminal - Sam Bankman-Fried was sentenced to 25 years in prison last week on seven counts of fraud, conspiracy, and money laundering related to the collapse of the now-defunct trading platform FTX.

• Pay Palm - Amazon has launched an AI-powered app allowing users to sign up for its palm recognition service directly from their phones. The service will enable payments, rewards, and more at Amazon and Whole Foods stores.

• The Federal Reserve reported a net loss of $114.3 billion in 2023 after reporting a $58.5 billion profit last year. This was due to a rise in the federal funds rate as the central banks tries to quell rising inflation.

Markets

ASX Company Movers

Commodity Prices

Bonds

Forex

ETF Watch

Global Health Check

Newsletter Recommendation

A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of March 22

📂 Broker Ratings

1. ALS Ltd (ALQ) - Downgrade to Hold from Add (Morgans)

2. Alumina Ltd (AWC) - Downgrade to Equal-weight from Overweight (Morgan Stanley)

3. Cettire (CTT) - Downgrade to Hold from Buy (Bell Potter)

4. IGO (IGO) - Downgrade to Underweight from Equal-weight (Morgan Stanley)

👨‍💼 Director Transactions

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

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