☕️ September to Remember Ends on Record High

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Welcome to Equity Espresso’s Market Recap.

The Australian share market reached a new record high on Monday, marking its seventh peak this month. The S&P/ASX 200 Index rose 0.7% to 8,269.8, capping off a strong September quarter with a 6.5% gain.

This rally was fueled by China's additional stimulus measures and escalating Middle East tensions, which boosted commodity prices and energised mining and energy stocks. Seven out of eleven sectors advanced, with Energy (+2.61%) and Materials (+1.76%) leading the charge. Woodside Energy (+3.45%), Yancoal Australia (+3.03%) and Beach Energy (+3.40%) were some of the big movers in the energy space. Meanwhile, Mineral Resources (+5.90%) continues its recent resurgence, while BHP Group (+2.73%) and Fortescue (+2.89%) were also big movers

Oil prices surged on Monday, with Brent crude and West Texas Intermediate futures jumping over 1%, as Israel's attacks in Lebanon and Yemen heightened concerns about potential Iranian involvement in the conflict. Simultaneously,

Iron Ore futures experienced a remarkable 10% increase in Asia, building on gains from the previous week. This surge was fueled by China's announcement of additional economic stimulus measures over the weekend. The People's Bank of China mandated lenders to reduce mortgage rates by the end of October, while major cities like Guangzhou and Shanghai eased home-buying restrictions.

Company News

• Liontown Resources (+2.55%) rose after it announced its inaugural shipment of spodumene, totalling 11.8kwmt @ 5.2%, left port.

• Synlait Milk (+7.04%) rose despite reporting a challenging FY24, with a net loss after tax of $182.1 million and adjusted EBITDA of $45.2 million. The company recognised a $114.6 million non-cash impairment charge due to revised future demand and underutilisation of its North Island facilities.

• Star Entertainment Group (+18.00%) rebounded after falling by 44% on Friday after coming out of a trading broker.

Wall Street

The Dow Jones (+0.33%) closed at a record high, driven by a subdued inflation report that increased hopes for further Federal Reserve rate cuts. This optimism also boosted small-cap stocks and helped all three major indexes post weekly gains. Despite the Dow's gains, the technology-heavy Nasdaq (-0.39%) and the S&P 500 (-0.13%) experienced slight declines, though both remained close to their recent record highs.

Investors now slightly favour a 50-basis-point cut at the Fed's next meeting, with a 52.1% probability, according to the CME Group's FedWatch Tool. The Russell 2000 index, which tracks small-cap stocks that typically benefit from lower interest rates, reached a one-week high.

Costco (-1.75%) reported mixed fourth-quarter results, with revenue slightly missing expectations at $79.70 billion. U.S. comparable sales rose 5.3%, and e-commerce grew 18.9%. Despite weaker gasoline prices and cautious consumer spending on high-priced items, nonfood categories performed strongly. The company's fiscal year net sales increased 5% to $249.6 billion.

Super Micro Computer (+4.31%) shares rose, partially recovering from a 12% drop on Thursday following news of a U.S. Justice Department probe. This investigation comes after short-seller Hindenburg Research's allegations of accounting manipulation last month. The company, which provides server and storage solutions, continues to face scrutiny over its financial practices.

S&P500 Sector Performance

Economic Data

• U.S. Consumer Sentiment was 70.1 in September, the highest mark in five months, beating expectations of 69.3.

• U.S. Personal Expenditure increased by 0.1% month-on-month in August after rising 0.2% in July, which was in line with expectations.

• China’s General Manufacturing PMI fell to 49.3 in September 2024 from August's 50.4, missing market forecasts of 50.5, hitting its lowest level since July 2023.

• China’s Non-Manufacturing PMI was 50.0 in September 2024, down from 50.3 in the previous month. This latest figure was below market estimates of 50.4, pointing to the lowest level since December 2022.

• U.K GPD grew by 0.5% YoY in Q2 2024, slightly below 0.6% in the first estimate and 0.7% in Q1.

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Quick Singles

🌎️ Around The Globe

• Alphabet, Google's parent company, announced plans to invest $3.3 billion in South Carolina for two new data centres. CEO Sundar Pichai revealed that the company will build two new campuses in Dorchester County and expand its facility in Berkeley County.

• Disney+ has launched a paid-sharing program across multiple regions, including the U.S., Canada, and Europe, following Netflix's example. The initiative aims to convert password-borrowers into paying customers by allowing subscribers to legally share accounts with non-household members for an additional fee.

• Klarna has partnered with Adyen to expand its buy now, pay later (BNPL) service to physical retail stores. The agreement will integrate Klarna's payment options into over 450,000 Adyen payment terminals in brick-and-mortar locations. Initially launching in Europe, North America, and Australia, this move represents BNPL providers' efforts to extend their services beyond online shopping into in-store experiences.

• Meta is introducing a new AI chatbot feature using the voices of five celebrities: John Cena, Kristen Bell, Judi Dench, Awkwafina, and Keegan-Michael Key. U.S. users will soon be able to select their preferred celebrity voice to interact with the chatbot across Meta's platforms, including Facebook, Instagram, Threads, and WhatsApp.

• Newsmax and Smartmatic reached a last-minute settlement in a major defamation lawsuit over false 2020 election claims, avoiding a trial in Delaware. The agreement was announced hours after jury selection began, with opening statements initially scheduled for Monday.

• OpenAI, the creator of ChatGPT, plans to restructure its core business into a for-profit benefit corporation, moving away from control by its non-profit board. This change aims to make the company more appealing to investors while potentially affecting how AI risks are managed.

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ASX Company Movers

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*1-year, 3-year and 5-year returns are calculated as of August 31 2024.

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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.