MinRes's Monday Makeover: CEO & Chair Out (Eventually)

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Welcome to Equity Espresso’s Market Recap.

The Australian share market started the week positively on Monday, with the S&P/ASX 200 index rising 0.6% to 8,164.6 points, breaking a three-session losing streak. This upturn followed Wall Street's positive performance on Friday and comes ahead of a significant week featuring the U.S. presidential race and corporate earnings reports. Locally, the Reserve Bank of Australia meets on Tuesday, where traders have a 95% probability that the cash rate will remain at 4.35%.

The Technology (+1.71%) and Utilities (+1.70%) sectors led the gains of the nine sectors to finish higher on the ASX, with Wisetech Global (+2.55%), Technology One (+2.47%) and APA Group (+2.79%) some of the days best performers.

Materials (-0.46%) and Energy (-0.70%) stocks declined despite OPEC+'s announcement of delayed December production increases and a nearly 2% rally in oil prices, with Brent and light crude futures exceeding $US74 and $US70, respectively.

Top Story

Mineral Resources (MinRes) said that Founder and Managing Director Chris Ellison will depart the company within the next 12-18 months, and Chairman James McClements will step down by or before next year's AGM.

The leadership changes come after an investigation revealed significant governance failures, including Ellison's undisclosed involvement with a British Virgin Islands company (FEEHL) that sold mining equipment to MinRes subsidiaries without proper related-party disclosure during the company's 2006 IPO. The investigation also uncovered that Ellison had charged up to 70% above market rates for industrial properties leased to MinRes, potentially resulting in millions in excess payments. Additionally, company emails related to FEEHL were deliberately deleted in 2019, and Ellison failed to disclose a $3.9 million tax settlement with the ATO until November 2023.

The MinRes board imposed substantial financial penalties on Ellison, totalling $18.4 million. This includes:

• A direct repayment of $3.79 million for the historical FEEHL transactions,

• Forfeiture of up to $6.5 million in unvested incentives,

• Withdrawal of proposed incentives worth approximately $3.1 million and

• A commitment to make $5 million in charitable contributions over five years.

Mineral Resources shares ended the day down 9.63%

Company News

• Fletcher Building (+1.46%) shares edged up as its subsidiary Winstone Wallboards faces legal action from New Zealand's Commerce Commission over alleged anticompetitive practices involving historical volume rebates, with the case now filed in the High Court.

• GPT Group's (-) shares were flat after maintaining its 2024 forecast of 32.0 cents per security in Funds from Operations and a distribution of 24.0 cents per security.

• Telix Pharmaceuticals' (+3.50%) shares rose following the U.S. Centers for Medicare & Medicaid Services' announcement of separate payments for specialised diagnostic radiopharmaceuticals in hospital outpatient settings. Starting in 2025, payments will be based on Mean Unit Cost for diagnostics costing over $630 per day, improving patient access to advanced imaging agents.

• Westgold Resources (+3.23%) reported a record drill intercept at its Polar Star lode within the Bluebird-South Junction complex, discovering 13.71m at 18.02g/t gold, including 5.85m at 36.37g/t gold. The company aims to increase production to 100,000 tonnes monthly by mid-2025.

Wall Street

U.S. stock markets finished higher on Friday, with the Dow Jones rising 0.69%, the S&P 500 gained 0.41%, and the Nasdaq advanced 0.80%. The positive performance was largely driven by Amazon's impressive 6.2% gain following stronger-than-expected earnings, though Apple's shares declined 1.2% due to concerns over its China sales performance.

Despite Friday's gains, all three major indexes recorded weekly losses, with the S&P 500 down 1.38%, Nasdaq falling 1.51%, and the Dow dropping 0.16%. The Consumer Discretionary (+2.40%) sector reached a two-year high, boosted by Amazon's performance, while Utilities (-2.26%) and Real Estate (-1.09%) sectors lagged, as investors remain focused on the upcoming U.S. election and Federal Reserve meeting.

Boeing (+3.54%) and its machinists' union reached a tentative deal to end a seven-week strike. The deal offers a 38% pay raise over four years, with a $12,000 bonus option. Workers will vote on the improved proposal on Monday. Intel (+7.81%) shares jumped after beating Q3 expectations with earnings of 17 cents per share on $13.28 billion revenue. Despite ongoing restructuring and job cuts, the company's positive guidance overshadowed a 6% year-over-year revenue decline.

MicroStrategy (-6.05%), the largest corporate Bitcoin holder with 252,220 bitcoins, plans to raise $42 billion over three years to expand its reserves, having already spent $1.6 billion on recent Bitcoin purchases.

S&P500 Sector Performance

Economic Data

• The ANZ-Indeed Australian Job Ads rose by 0.3% month-over-month in October 2024, much weaker than a 2.3% gain in September.

• The U.S. Economy added 12,000 jobs in October 2024, well below forecasts of 113,000 and September’s figure of 223,000. It was the lowest job growth since December 2020, when 243,000 jobs were lost due to the impact of strikes at Boeing.

• The U.S. ISM Manufacturing PMI fell to 46.5 in October 2024 from 47.2 in September and below forecasts of 47.6.

• U.S. Average Hourly Earnings for all employees on US private nonfarm payrolls rose by 13 cents, or 0.4%, over a month to $35.46 in October 2024.

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🌎️ Around The Globe

• Comcast is considering spinning off its cable TV networks into a separate company and seeking a streaming partner for Peacock, which has 36 million subscribers, to strengthen its position against competitors like Netflix.

• The E.U. is investigating Chinese e-commerce platform Temu for potential violations of digital service laws, including issues with rogue traders, addictive app design, and algorithm transparency concerns.

• Google Maps is integrating Gemini AI technology to transform from a navigation tool into an entertainment guide, marking a significant evolution in the service's 20-year history.

• Semaglutide, an anti-obesity drug, has shown promising results in treating knee osteoarthritis, according to a multi-country clinical trial. The medication significantly reduced pain and improved mobility, with effectiveness comparable to opioids.

• Starbucks announced the return of handwritten names on cups using Sharpies, reversing a COVID-era policy of using printed stickers, as part of efforts to revitalise the brand after a recent sales decline.

• The Tokyo Stock Exchange will extend trading by 30 minutes to 3:30 p.m., with 40% of companies planning to report earnings during the new period, raising concerns about algorithm-driven trading potentially distorting stock values.

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

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