Rupert Murdoch's Media Legacy Ends

A volatile day on the market as the ASX200 index fell by almost 100 points in the morning, dropping below the 7,000 mark. Before clawing back the lost ground to the end session up 3.6 pts or 0.05% to 7,068.80.

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. 📰 Rupert Murdoch Bids Farwell

  2. 🩸 ACL / Healius Merger on Pause

  3. 📉 Global Stock Market Wipeout

  4. 🥑 Costa Group Takeover Approved

  5. 👷‍♂️ Chevron Workers Pay Dispute Ends

The Recap


ASX Defies Global Markets

A volatile day on the market as the ASX200 index fell by almost 100 points in the morning, dropping below the 7,000 mark, before clawing back the lost ground to the end session up 3.6 pts or 0.05% to 7,068.80.

Global markets saw a sell-off overnight, with the S&P 500 posting its largest one-day fall since March last year. European and U.K. markets were also lower.

The ASX200 index ended the week down 1.64%, as September proves to be a negative month, as markets digest company earnings during August. Only 2019 saw a positive month during September in the last five years.

Bond yields globally continue to tick off decade peaks, with the Australian 10-year yield reaching a 10-year high of 4.38% during the day.

The day's big story was Rupert Murdoch stepping down from the helm of media juggernaut NewsCorp. Rupert’s son, Lachlan Murdoch, will succeed him as the sole chairman of News Corp. The Newscorp (NWS) share price rose 2.2% today after the news broke overnight. More on that story later.

The dispute between Chevron and labour unions appears to be ending, with an agreement reached to end strikes at key liquefied natural gas facilities. The Offshore Alliance, which comprises two major unions, confirmed that workers had accepted a proposed settlement on pay and conditions put forward by the country’s labour regulator. As a result, they will be suspending their industrial action. UK gas prices fell by 2% in the last 24 hours.

Outlook

S&P 500 (+0.24%) and NASDAQ (+0.33%) futures indicate a positive night could be on the cards for U.S. markets. The key economic data to keep an eye on tonight includes:

  • U.S. S&P Global Services PMI

  • U.K. Retail Sales

  • U.K. Manufacturing PMI

  • U.K. Services PMI

Economic News
  • The Judo Bank Flash Australia Manufacturing PMI fell to 48.2 in September 2023, indicating deteriorating business conditions in the sector.

  • The number of Americans filing for unemployment benefits plummeted by 20,000 to 201,000 on the week ending September 16, the lowest since late January and well below market expectations of 225,000.

  • The Bank of England pulled a surprise, keeping its interest rates on hold at 5.25%, breaking a streak of 14 straight rate rises. This came after a cooler-than-expected August inflation read of 6.7%, which was lower than expected but only down 0.1% from July. It was a close call, though, with the committee voting 5-4 to maintain the same rate rather than raising it by another 25 bps.

Wall Street

The S&P 500 posted its worst one-day performance since March 2022, dropping by 1.64% as reality set in that the Federal Reserve's restrictive monetary policy will remain in place for longer than anticipated. The NASDAQ also fell (-1.8%), with Amazon (-4.4%), Nvidia (-2.9%) and Tesla (-2.6%) all lower.

All 11 key indices finished the day in the red, with Real Estate (-3.48%) and Consumer Discretionary (-2.8%) falling the most. Bond yields continue to remain elevated, with the two-year bond yield trading at heights not seen since 2006.

FedEx’s stock price bucked the trend, gaining 4.4% after the company reported mixed fiscal first-quarter earnings. FedEx reported adjusted earnings of $4.55 per share, greater than the $3.73 estimated by analysts. Revenue of $21.68 billion came in below expectations of $21.81 billion.

Cisco stock fell 3.9% despite announcing it is acquiring cybersecurity software company Splunk for $157.00 per share in a cash deal worth around $28 billion. Splunk’s stock price rose by over 20% on the back of the announcement.

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Quick Singles

🪃 Local News

  • An agreement was reached today between Chevron and labour unions to end the strikes at key liquefied natural gas facilities in Australia that have caused disturbances in the global fuel market. The workers have agreed to the proposed settlement on pay and working conditions presented by the country's labour regulator and will halt their industrial action. Chevron confirmed that they have accepted the proposal.

  • Qantas CEO Vanessa Hudson apologised to its customers today, saying the airline had “got some things wrong” and was “sorry”.

  • The Australian corporate watchdog has fined the National Australian Bank $2.1 million for continuing to charge periodic payment fees to customers even though the bank knew it was overcharging them.

🌏 Around The Globe

  • Broadcom shares fell after The Information reported that Google is holding internal discussions about dropping the artificial intelligence chip supplier in favour of its own internally developed chips by 2027.

  • Free Covid Tests - with winter in the U.S. approaching, the federal government will restart a program that offers free at-home Covid tests, expected to cost $600 million.

  • Kraft is recalling 83,000 cases of its individually wrapped American cheese slices because the Singles pose a “gagging” risk. 🤮 

  • Walmart is opening a pet centre that will offer veterinary care and grooming services in a pilot location near Atlanta, which employees of vet care company PetIQ will staff.

  • During its fall hardware event, Amazon unveiled a new version of Alexa powered by a sophisticated language model. The upgraded Alexa can comprehend conversational phrases, provide appropriate responses, interpret context more accurately, and fulfil multiple requests with a single command.

  • J.P. Morgan Chase has announced that it will include Indian government bonds in its benchmark emerging-market index. This can potentially attract billions of foreign inflows to India's debt market. HSBC Holdings Plc predicts that the inclusion could lead to up to $30 billion of inflows.

  • Russia has banned gasoline and diesel exports to all countries except four ex-Soviet states, Belarus, Kazakhstan, Armenia and Kyrgyzstan.

Crypto Corner

  • Mt. Gox has delayed the deadline for repayments to customers by another year to October 31, 2024. Customers have been waiting since 2014 to get money back from the defunct exchange

  • PayPal has launched its stablecoin PYUSD on Venmo for payments and transfers. The feature is only available to some users but will be rolled out to all in the next few weeks.

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Markets

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ASX News

ASX Company Announcements

Australian Clinical Labs (ACL) proposed merger with Imaging and Pathology provider Healius (HLS) remains on hold, with the ACCC pausing the timeline of the proposed merger pending a request for more information.

Costa Group (CGC) has accepted a takeover offer from a consortium led by U.S. firm Paine Schwartz Partners. The original proposal, made in May, was for $3.5 per share but later reduced to $3.20 due to a lower profit forecast. The deal values Costa's shares at $1.5 billion, offering a 43% premium to the share price on October 25, 2022. The board of Costa Group has recommended accepting the offer.

Mineral Resources (MIN) provided an update on its Mineral Resources and Ore Reserves statements for its lithium and iron ore deposits. The company confirmed that its lithium reserves now total more than 200 million tonnes, with successful drilling at Mt Marion confirming it has a longer life and excellent potential for underground mining.

Nib Holdings (NHF) announced it has completed the acquisition of the National Disability Insurance Scheme (NDIS) plan manager, BudgetNet, through an asset sale agreement. The acquisition will make it the sixth plan manager to join Nib Thrive’s house of brands following the acquisition of Adelaide-based plan manager Developing Links. “We now support over 37,000 participants to manage their NDIS funds, to process claims and pay invoices, as a result of our latest acquisition,” Chief Executive Mr Adlington said.

Nickel Industries (NIC) completed the placement of 19.99% of the company’s ordinary shares to United Tractor’s (UT) subsidiary PT Danusa Tambang Nusantara (DTN).

Tesserent (TNT) - Thales proposed acquisition of cybersecurity company Tesserent has received written approval from the Foreign Investment Review Board (FIRB), who have no objections to the takeover offer. Under the proposal, Thales will acquire Tesserent for $0.13 per share.

Post of The Day

Deep Dive

Rupert Murdoch Bids Adieu to
Seven-Decade Media Reign

Rupert Murdoch, the media magnate behind Fox Corp. and News Corp., has announced his departure from the helm of his empire, marking the end of an era that spanned seven decades.

At 92, Murdoch's influence has been undeniable, with a vast media reach that reshaped the global media and entertainment sectors. His conservative voice echoed through newspapers in the U.S., U.K., and Australia, and he was instrumental in creating the U.S. cable news powerhouse, Fox News.

Lachlan Murdoch, Rupert's 52-year-old son, will succeed him as the sole chairman of News Corp. and will also continue his roles as the executive chairman and CEO of Fox.

The investment community has anticipated this transition for some time, and Rupert's decision solidifies Lachlan's leadership over the family's businesses. Lachlan faces the challenge of steering Fox through the evolving TV landscape, marked by a shift to streaming and the repercussions of the 2020 election coverage. At News Corp., the decline of traditional newspapers and the emerging influence of artificial intelligence are among the issues at the forefront.

The Murdoch media empire flourished in an age of print media, cinema, and cable TV. However, it has not established a dominant presence in the burgeoning world of streaming and user-generated content. The empire has also been marred by controversies, from the infamous phone-hacking scandals in London to accusations against Fox News for disseminating misinformation during the 2020 U.S. presidential election.

In a letter to Fox staff, Rupert Murdoch expressed confidence in the future, stating that he and his companies are in good health. He emphasised his ongoing commitment to the "contest of ideas" and highlighted the intense battle for freedom of speech. As he steps back, Murdoch assures that he will remain an active community member, keenly observing and offering insights.

Daily Quiz

Test Your Knowledge

Yesterday’s Daily Quiz Question. Which bank did the ACCC block from acquiring Suncorp’s banking arm in August?

Answer: ANZ. The most popular answer, with 51% of you getting that correct. Well done!

The proposed acquisition of Suncorp’s banking division remains in flux as ANZ has appealed the consumer watchdogs’ decision to block the deal on the basis it would reduce competition.

A Little Extra

📉 Going Down?

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

  1. Pilbara Minerals (PLS) - 11.54%

  2. Flight Centre (FLT) - 9.51%

  3. Elders Limited (ELD) - 8.82%

  4. Genesis Minerals (GMD) - 8.78%

  5. IDP Education (IEL) - 8.59%

  6. Core Lithium (CXO) - 7.90%

  7. Select Harvests (SHV) - 7.73%

  8. Sayona Mining (SYA) - 7.50%

  9. Syrah Resources (SYR) - 7.42%

  10. Mesoblast (MSB) - 7.33%

Weekly Movers ⬆️ 

  • Genesis Minerals (GMD) +6.14% to 8.78%

  • Healthco Healthcare (HCW) +3.06% to 5.07%

  • A2 Milk (A2M) +2.40% to 5.02%

Weekly Movers ⬇️

  • Hastings Technology (HAS) -2.31% to 0.41%

  • Jervois Global (JRV) -2.01% to 1.60%

  • Incannex Healthcare (IHL) -1.55% to 0.62%

📊Broker Ratings

What do the brokers have to say?

  1. Genetic Signatures (GSS) - Upgraded to Speculative Buy from Hold (Bell Potter). Target Price $0.90

  2. Megaport (MP1) - Upgraded to Buy from Neutral (Citi). Target Price $12.50

  3. Mesoblast (MSB) - Upgraded to Speculative Buy from Hold (Citi). Target Price $0.58

👨‍💼 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.