Good Evening,

Welcome to Equity Espresso's Daily Recap. It was not a great day to kick off the new week as markets continued to fall, not helped by the better-expected retail sales data.

The Recap

The ASX200 index fell below the 6,800 mark, following a weak lead from Wall Street on Friday as safe-haven assets continue to be more popular with investors than equity markets. The ASX200 index finished the day down 54 points or 0.8% to 6,772.90.

Better-than-expected retail sales didn’t help the equity market either, only adding to the case that interest rates need to be lifted to drive down inflation. September retail sales rose 0.9% from August, which exceeded economists estimates of a 0.3% lift.

Surprisingly, Technology (+0.43%) was the only sector that ended the day in the green, as accounting software company Xero (+2.2%) rose on the back of a buy rating from broker Citi group last week, who increased their price target to $141.90

The Gold price finally cracked the US$2,000/oz barrier as investors continued to the safe-haven commodity. Gold companies Northern Star (+0.42%) and Evolution Mining (+0.56%) finished slightly higher. The price of gold is now up over 14% in October.

The Energy (-2.6%) sector fell as Crude Oil prices dipped below US$85.00 despite the looming fears of the conflict in the Middle East escalating. Woodside Energy (-2.5%), Santos (-2.0%) and Ampol (-2.5%) all finished the day in the red.

Economic Data

• Retail Sales smashed expectations for September, giving more credence that the RBA will likely raise rates at next week’s board meeting. Sales rose 0.9% during the month, beating analysts’ estimates of a 0.3% increase. The result came following upward revisions to the August and July reports. The largest jump came from Department Stores (+1.7%) and Household Goods. (+1.3%)

• U.S. Core PCE prices (excl. food & energy) increased by 0.3% in September from August, the biggest rise in four months.

Wall Street

A sharp rise in Amazon’s stock price (+6.8%) helped the NASDAQ (+0.38%) finish higher, but it wasn’t enough to drag the S&P 500 into the green, which ended Friday down 0.48%. A stronger-than-expected Core PCE price read supports the notion that interest rates will be higher for longer. Some of the companies who reported on Friday included:

Amazon (AMZN) was the big mover on Friday after posting better-than-expected Q3 earnings with a 13% revenue jump to $143.1 billion. EPS was $0.94 vs. analysts expectations of $0.58. The e-commerce giant forecasted fourth-quarter sales of between $160 billion and $167 billion.

Intel (INTC) stock rose 9.2% on Friday, a day after the chipmaker reported third-quarter results that topped analysts’ expectations. Intel also gave strong guidance for the current quarter, with CEO Pat Gelsinger saying the company plans to cut costs by about $3 billion this year.

ExxonMobil (XOM) released its Q3 earnings report, which showed earnings of $2.27 per share, excluding exceptional items. This is slightly lower than the expected earnings of $2.37 per share. The decline in North American activity was highlighted by analysts as the cause for this shortfall, with oil and gas prices decreasing from last year's highs.

Outlook

Locally, the key economic news for the week includes Trade Balance and Home Loan data, both set to be released on Thursday.

All signs point to a positive night on Wall Street, with the S&P 500 (+0.34%) and NASDAQ (+0.49%) futures both higher this afternoon.

No key economic data is expected tonight; Tuesday, on the other hand, will see several key items drop, including:

• Euro Zone YoY Q3 GDP, est. 0.2%

• Euro Zone YoY Oct CPI, est. 3.2%

• U.S. Consumer Confidence (Oct)

Some key companies reporting tonight include HSBC, McDonald’s, Arista Networks and Welltower.

Sponsor

Daily Curated Tech Digest
From Top Media Outlets

The AI tech landscape is evolving rapidly, with daily introductions of new tools, features, and companies. Keeping pace with these advancements can be challenging.

Techespresso sends a daily summary of the most important AI and Tech news, selected from 50+ media outlets (The Verge, Wired, Tech Crunch...)

Sign up for Free today.

Quick Singles

🪃 Local News

• National Australia Bank has reneged on a pledge to borrowers that it would only raise monthly mortgage repayments near the 12-month mark for variable home loans.

• The Victorian Chamber of Commerce and Industry will put forward a list of proposed incentives for student workers, aiming to address direct workforce entry and reduce university dropout rates. The policy emphasises improved career advice, subsidies, and trained professionals from year 7, with government investment in career education initiatives.

• Safe Work Australia has called for a nationwide ban on engineered stone due to the health risks of silica. Silica dust can cause deadly lung damage for construction workers, with the report recommending a total ban on engineered stone products.

🌏 Around The Globe

• Ford will delay a $12 billion investment it earmarked for expanding electric vehicle (EV) manufacturing, including a newly planned battery plant. This marks the second construction halt by the company in just over a month.

• Jamie Dimon is planning to sell approximately $141 million of JPMorgan stock. It’s the first time the bank’s CEO is selling shares since he became leader in 2005.

• Google reportedly plans to invest $2 billion in Anthropic, a competitor of OpenAI committed to responsible AI development.

• BlackRock predicts that the global private debt market will roughly double to $3.5 trillion by 2028.

• Citigroup has finalised $260 million in asset-backed financing for WeLab, which is seeking capital for loan growth.

• British Real Estate company Zoopla says there is a widespread decline in U.K. house prices, with four out of five local areas experiencing a decrease in September. The housing market is under pressure as households grapple with expensive borrowing and a tightening cost of living.

• The G7 countries are set to implement an AI Code of Conduct to address privacy and security risks. The voluntary code aims to promote global trust and safety in advanced AI systems and acts as a bridge to formal regulations, ensuring ethical AI use.
  

Enjoying The Recap?

Forward this email to a friend, family member, or work colleague who would benefit from getting caught up on the day’s news.

They can sign up with the link below. ⬇️ 

Markets

ASX200 Company Movers

Index & Commodity Prices

Sector

Bond Prices

ETF Watch

ASX News

🗞️ Company Announcements

• 4D Medical (4DX) announced it has entered into a contract with Internal Diagnostics to enable patient access to 4D Medicals XV technology, with a pilot phase at two clinical sites in Victoria.

• Adore Beauty (ABY) provided a quarterly trading update today, reporting a 4.7% increase in revenue to $47.5 million, with a 1.5% lift in active customers to 803,000. The company said it was on track to achieve EBITDA margins of 2 - 4% in FY24.

• Aussie Broadband (ABB) has increased its takeover offer of Symbio Holdings (SYM) to $3.10 - $3.15 per Symbio share, made up of cash, ABB shares and a special dividend.

• Bellevue Gold (BGL) is ramping up production at its self-titled project after pouring its first gold last week. In a quarterly activities report, the miner said commissioning at the site was underway after the project was delivered on schedule and budget.

• DUG Technology (DUG) reported a Q1 revenue jump of 15% to US$12.9 million after announcing it had won a record-high US$30.9 million in services projects awarded throughout the quarter - an 186% increase on the PCP.

• Endeavour (EDV) achieved continued sales growth in Q1 F24, with retail sales reaching $2.538 billion, a 1.9% increase, with online sales growing by 2.8% to $221 million. Hotel sales also increased by 2.8% to $553 million, with a focus on profitable growth as the company focused on competitive pricing for customers.

• IGO (IGO) shares sunk after it flagged that lower lithium prices would affect its December quarterly sales. IGO flagged softening demand, falling prices and an inventory buildup as the key reasons for the expected fall.

• Qantas (QAN) has filed its defence against the ACCC’s claims regarding flight cancellations in 2022, acknowledging past issues but asserting that it met legal obligations by rebooking or refunding affected passengers. The airline says it has taken steps to address the challenges faced during the post-COVID restart, including immediate removal of cancelled flights from sale and the development of an automated IT solution.

• Ramelius (RMS) reported quarterly gold production of 55,523/oz, which exceeded the company's internal estimates, with an AISC of A$1,975/oz. Ramelius said it is on track to achieve full-year guidance production of 250,000 to 275,000/oz.

• Regal Partners (RPL) responded to an article by The AFRs Street Talk, confirming it is in discussions with PM Capital about a potential transaction.  

• Tietto Minerals (TIE) was the big mover today after it announced that Chinese gold miner Zhaojin Mining put forward a bid for the West African gold miner for $0.58 per share. Tietto Minerals shares closed at $0.565.

 📱 Post of The Day

Technical Indicators

Chart Watch

A bearish chart to keep an eye on - Brambles (BXB)

Notes

• There has been a lot of selling pressure in the last couple of days following a disappointing Q1 trading update.

• The 200 Exponential Moving Average (EMA) on a daily timeframe has been broken.

• If the heavy selling continues, the gap ($12.15 - $12.50) from February could be filled.

• To watch - If the price can return to the 200 EMA, it could provide a shorting opportunity to fill the February gap.

Newsletter Reccomendation

One-click subscribe

Analyst Report

Beach Energy

Code: BPT | Market Cap: $3,376m  | Current Price: $1.54
Price Target: $2.00 | Sector: Energy | Broker: Bell Potter

Beach Energy Limited operates as an oil and gas exploration and production company. The company engages in operated and non-operated, onshore and offshore, and oil and gas production in five producing basins across Australia and New Zealand.

September Quarterly Highlights

• Weaker Production - Beach reported quarterly group production of 4.5MMboe (BP est. 4.8MMboe), a 10% decrease on the prior quarter primarily driven by lower customer nominations at the Victorian Otway Basin as flagged at the FY23 result.

• Quarterly Revenue of $397m was down from $450m in the prior quarter on lower sales volumes and an average realised gas price of $8.90/GJ (down 6% QoQ).

Broker Recommendation 

Beach Energy has a strong production growth outlook, funded and diversified across five energy basins and four gas markets, including LNG. Beach plans to increase production and cash flow by FY25-26. It has a strong balance sheet and a capital management framework with franked dividends as a key component. The broker has a positive view of the Australian East Coast gas and LNG markets and Beach’s strong earnings growth outlook. The broker maintains a Buy recommendation.

If you like the full copy of the report, reach out to us at [email protected] 

Daily Quiz

❓️ Test Your Knowledge

Last Week’s Daily Quiz Question. Which U.S. Federal Reserve Chair raised rates to 20% in 1981, including a single rise of 475 basis points?

Answer: Paul Volcker, well done to the 30% who got that correct. Fed chair raised rates to 20% during 1981 in a bid to bring down the high inflation that the U.S. had experienced through the late 1970’s and early 1980’s

A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of October 24

📊 Broker Ratings

What do the brokers have to say?

1. Clean Seas Seafood (CSS) - Downgrade to Hold from Buy (Bell Potter)

2. Harvey Norman (HVN) - Upgrade to Neutral from Sell (UBS)

3. IGO (IGO) - Downgrade to Neutral from Buy (Citi)

4. Janus Henderson (JHG) - Upgrade to Buy from Hold (Bell Potter)

5. ResMed (RMD) - Upgrade to Overweight from Equal-weight (Morgan Stanley)

👨‍💼 Director Transactions

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

Follow Us

Stay on top of the daily news on our social channels, Twitter, Facebook, LinkedIn and Instagram.

Follow Equity Espresso on Google News to get notified of the important news story of the day throughout the market session.

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.