Myer's Shopping Spree & MinRes's Memory Problems 🤔

Good Evening,

Welcome to Equity Espresso’s Market Recap.

The S&P/ASX 200 Index rose 0.3% to 8,249.2 points on Tuesday, driven primarily by gains in consumer stocks following Myer's agreement to acquire Premier Investments' apparel brands business. The market's positive performance was broad-based, with seven out of eleven sectors advancing, particularly in Consumer Discretionary (+0.76%) and Materials (+0.60%) stocks. Gold miners showed notable strength, with Northern Star Resources (+3.53%) and Westgold Resources (+3.20%) posting positive gains.

In the Energy (-0.67%) sector, oil markets showed signs of stabilisation after Monday's significant decline, with Brent crude hovering around $US72 per barrel and WTI below $US68. This steadying came as Israel indicated openness to a brief Gaza ceasefire in exchange for hostage releases following a weekend strike on Iran that avoided oil infrastructure damage.

Myer (-1.55%) today announced its largest transformation since 2009, merging with Premier Investments' (+9.91%) Apparel Brands division in a deal that will add 719 stores, including Jay Jays, Dotti, Just Jeans, Portmans, and Jacqui E, to its portfolio. The expanded retail group will generate over $4 billion in annual sales with 17,300 staff and aim to enhance its loyalty program reach and supplier relationships. Premier Investments' Solomon Lew will control 27% of the enlarged Myer group, while Premier refocuses on its Peter Alexander and Smiggle brands.

Bitcoin surged past US$70,000 on Monday, reaching a five-month high with a 2.63% gain. The rally was fueled by strong U.S. Bitcoin spot ETF inflows, totalling $164.2 million for the day and $3.3 billion for October, significantly outpacing previous months. Trump's pro-Bitcoin stance and continued ETF demand are contributing to the bullish momentum.

Company News

• Mineral Resources (+7.15%) revealed it knew about founder Chris Ellison's tax evasion scheme since June 2022, only disclosing this after media exposure. The company, which first learned of offshore payments dating back to pre-IPO contracts in 2006, maintains the scheme was immaterial to shareholders. While Ellison self-reported to the ATO in October 2023, the entire board wasn't briefed until June 2024, with chairman James McClements now investigating new contradictory information.

• BlueScope (-0.52%) has downgraded its 1H FY2025 underlying EBIT guidance to $270-310m from $350-420m, citing global steel industry challenges, including high Chinese exports, cost inflation, and US market uncertainty.

• Cettire (-17.29%) fell despite reporting Q1 FY25 sales revenue of $155.0m, up 22% year-on-year, with Adjusted EBITDA of $2.0m. Despite softer global luxury demand, the company improved profitability through optimised operations, achieving a 5% EBITDA margin in September. Active customers grew 43% to 698,066, while repeat customers generated 67% of gross revenue.

• Serko (+21.95%) announced a strategic expansion into North America through a $US12m acquisition of Sabre's GetThere platform and a five-year partnership with Sabre.

• Zip Co. (+11.83%) reported strong first-quarter FY25 results, with Group Cash EBTDA reaching $31.7m, up 233.7% year-on-year, primarily driven by exceptional U.S. performance, where TTV grew 42.8% to US$1,301.8m. Overall, the company achieved $2.8b in TTV (up 22.8%) and revenue of $239.9m (up 18.8%) while expanding its merchant base to 80.1k.

Wall Street

Wall Street moved higher on Monday, with all major indexes closing in positive territory - the Dow Jones up 0.65%, the S&P 500 gaining 0.27% and the Nasdaq rising 0.26%. Market sentiment was bolstered by reduced geopolitical tensions after Israel's targeted response to Iran focused on missile factories rather than critical infrastructure. At the same time, investors positioned themselves ahead of a significant week of earnings reports from major technology companies.

The trading session saw notable outperformance from small-cap stocks, with the Russell 2000 surging 1.63%. Sector performance was mixed—Energy stocks declined 0.65% as oil prices dropped 5% due to easing supply concerns, while Financial (+1.14%) stocks led the gains across sectors. The "Magnificent Seven" technology stocks, which have been instrumental in driving markets to record highs, saw positive movement ahead of their earnings releases, with major tech companies like Alphabet, Meta, and Apple advancing during the session.

Robinhood (+3.03%) shares gained after the company announced it would offer trading contracts tied to Kamala Harris and Donald Trump before the presidential election. To participate, users must meet specific requirements, including U.S. citizenship. TSMC (-1.90%) shares fell after reportedly stopping shipments to a Chinese chip designer when its technology was discovered in a Huawei AI processor, violating U.S. restrictions that have banned Huawei from accessing such technology over security concerns. McDonald's stock gained 1.43% as it plans to reintroduce Quarter Pounders without slivered onions at 900 locations affected by a recent E. coli outbreak, which caused a 7.5% stock decline last week.

S&P500 Sector Performance

Economic Data

• Japan's Unemployment rate dropped to 2.4% in September 2024, below market expectations of 2.5%, marking its lowest level since January. The number of unemployed fell by 40,000 to 1.68 million, while total employment decreased by 90,000 to 67.82 million.

• Singapore’s Unemployment rate fell to 1.8% in Q3 of 2024 from 2.0% in the previous quarter, marking the lowest level since Q1 of 2023.

• The Bank of Russia raised its key interest rate by 200bps to 21% in its October 2024 meeting, above market expectations of a 100bps increase, and signalled that it will likely continue raising interest rates in its upcoming December meeting.

Sponsor

2 Cards Charging 0% Interest Until 2026

Paying down your credit card balance can be tough with the majority of your payment going to interest. Avoid interest charges for up to 18 months with these cards.

Learn More

Quick Singles

🌎️ Around The Globe

• Alibaba has agreed to pay $433.5 million to settle a U.S. class-action lawsuit from investors who alleged the company's monopolistic practices forced merchants to use exclusive platforms. While denying wrongdoing, Alibaba settled to avoid litigation costs. The settlement covers investors affected between November 2019 and December 2020.

• Boeing announced a major stock offering that could raise to $24.3 billion, including 112.5 million shares of common stock and $5 billion in convertible stock. The move aims to bolster finances strained by a six-week worker strike that has halted production of key aircraft like the 737 MAX.

• Delta Air Lines is suing CrowdStrike over a worldwide technology outage in July that caused 7,000 flight cancellations and $500 million in losses. Delta claims CrowdStrike's untested Microsoft update caused the disruption, while CrowdStrike counters that Delta's outdated IT infrastructure and poor recovery response are to blame.

• Google plans to launch "Jarvis," an AI agent in December that can autonomously navigate web browsers to perform various tasks, including online shopping and scheduling. The tool represents a significant advance in automated web interaction capabilities.

• HSBC reported a better-than-expected 10% rise in third-quarter profit to $8.5 billion, driven by strong wealth and wholesale banking performance. The bank announced an additional $3 billion share buyback and unveiled restructuring plans under new CEO Georges Elhedery, including merging operations and splitting into East-West geographic divisions.

• UnitedHealth Group confirmed that a February ransomware attack by the Blackcat hacker group compromised the private data of over 100 million people, making it the largest healthcare data breach recorded. The breach affected Change Healthcare and exposed sensitive information, including health insurance details, medical records, billing data, and personal identification numbers.

Markets

ASX Company Movers

Commodity Prices

Bonds

Forex

Global Health Check

The Last Word

How are we doing?

We always love hearing from our readers and are constantly seeking feedback.

• How are we doing with Equity Espresso?

• Is there anything you’d like to see more of or less of?

• Which aspects of the newsletter do you enjoy the most?

Hit reply and say hello - or leave us feedback in the poll below:

If you enjoyed this newsletter, forward this e-mail to a friend.

If you’re that friend, subscribe here.

DISCLAIMER: Please note that the information provided in this newsletter is for educational purposes only and should not be considered financial advice. It is not intended to encourage you to buy/sell assets or make economic decisions. We strongly recommend conducting your research before making any investment.