Good Evening,

Welcome to Equity Espresso’s Daily Recap. 

The Australian market kicked off the new week in the green, albeit marginally, with the ASX 200 index gaining 6.8 pts. or 0.09% to 7,665.10 despite Wall Street falling on Friday. Six of the 11 sectors finished higher, with Telecommunication (+0.74%) and Financials (+0.73%) being the biggest positive movers in an even spread of sector winners. The Real Estate (-2.63%) sector saw a significant sell-off after Lendlease (-13.98%) had its largest one-day sell-off in four years after it downgraded profit expectations.

Lendlease lowered its Return on Equity guidance for the current year to 7% due to “higher execution risks” and the expectation of planned transactions. The update came after the company's full-year earnings announcement in August, where it said it would land at the “lower end” of its targeted 8 - 10% target range.

Star Entertainment was back in the news today, going into a trading half after the NSW regulator launched an independent inquiry into whether the company is fit to hold its license to operate the Star Sydney Casino. The NSW Independent Casino Commission (NICC) has appointed Adam Bell SC to conduct the inquiry, which is expected to take 15 weeks, ending May 2024.

Another busy day to kick off a flurry of earnings reports this week:

• A2M Milk (+12.5%) rose after it said growth in its China & Other Asia segment helped lift the company’s revenue and profit, up 3.7% and 15.6%, respectively, during the first half of FY24.

• Seven Group wants to buy the remaining 28.4% stake it doesn't own of Boral Group (+4.6%), where shareholders will receive a mix of cash plus Seven Group shares at a total value of $6.25 per Boral share. Boral shares closed at $6.12.

• Bluescope Steel (-2.3%) shares fell after it warned that the outlook for the second half of the financial year was likely to be weaker because of “unprecedented softness in Asian steel spreads”

• Bendigo and Adelaide Bank (-1.7%) fell after reporting a 5% fall in interim cash profits to $268.2 million as increased competition in mortgages squeezed the companies’ profit margins.

• Reliance Worldwide (+6.6%) saw a boost after the company unveiled a share buyback plan of US$17.8 million as part of its distribution policy to return 40% to 60% of annual NPAT to shareholders.

Wall Street

• U.S. stocks closed lower on Friday, with the NASDAQ (-0.82%) down most of the three leading indices after a hotter-than-expected producer prices report lowered hopes of an imminent interest rate cut by the Federal Reserve. The S&P 500 (-0.48%) and Dow Jones (-0.38%) also finished in the red. The data could encourage the Fed to wait before cutting rates, which comes after a hotter Consumer prices report released on Wednesday.

Earnings continued to flood in on Friday - here are the highlights:

• Coinbase (+8.84%) shares surged after the cryptocurrency exchange reported its first profit in two years as Bitcoin prices continue to climb. Coinbase’s Q4 earnings were $1.04 per share - smashing the 1 cent loss estimated by analysts. Revenue was $954 million, versus the consensus estimate of $822 million.

• Roku (-23.81%) shares got smashed after the streaming service provider forecasted a larger-than-expected Q1 loss, while its average revenue per user was below estimates during Q4.

• Toast (+16.77%) shares jumped after beating fourth-quarter earnings and revenue expectations while revealing plans to cut 500 jobs and announcing a $250 million share buyback.

Economic Data

• U.S. Producer Prices were up 0.3% month-on-month during January, the biggest monthly increase in five months. The rise followed a 0.1% decline in December and was also above forecasts of a 0.1% increase.

Sponsor

Get Exclusive Insights on Early-Stage Companies

New Money is home to the world’s top stories from early-stage public companies, crypto, and startups.

Discover what’s next. The world’s biggest ideas, disruptive trends, most exciting early-stage companies and groundbreaking entrepreneurs.

New Money is read by some of the world's top early-stage investors. Signup now (one-click subscribe) ⬇️ 

Quick Singles

🌎️ Around The Globe

• Apple is expected to receive a fine of approximately €500 million from the European Union (EU) due to an investigation into allegations that it suppressed music-streaming competitors such as Spotify on its platforms. The regulator found that Apple violated competition rules by preventing rival music services from informing users about cheaper alternatives outside Apple's App Store.

• JPMorgan Chase and Co. will pay civil penalties of about $350 million to regulators for reporting incomplete trading data to surveillance platforms.

• OpenAI has introduced its new text-to-video AI tool called Sora. The tool can create videos up to one minute long based on the user's input text, generating complex scenes with multiple characters. OpenAI plans to get feedback from experts, artists, and filmmakers before releasing it to the public.

• Japan's economy slipped unexpectedly into recession and fell behind Germany, becoming the world's fourth-largest economy. The country's Gross Domestic Product (GDP) contracted at an annualised rate of 0.4% in the final three months of last year, following a 3.3% decline in the previous quarter.

• A software glitch caused two of Waymo's autonomous vehicles to crash into a truck in Phoenix, leading to the company issuing its first-ever recall. The recall involves 444 self-driving cars.

• According to information shared by Eric Balchunas, an analyst at Bloomberg Intelligence, the 14 major Gold ETFs have had net outflows of $2.4 billion this year.

• Chinese e-commerce company JD.com has reportedly held exploratory talks about buying U.K. electronics retailer Currys. Over the weekend, Currys said it rejected a preliminary offer of 62 pence a share from Elliott Advisors that it believed “significantly undervalued” the company.

Markets

ASX Company Movers

Commodity Prices

Bonds

Forex

ETF Data

Global Health Check

Partners

Your Investing Essentials

Become a more informed and better investor with the best research tools from our trusted partners. Help support the Equity Espresso newsletter by signing up using the links below:

Trading View- The best charting platform money can buy. Used by over 50 million traders and investors around the world. Signup here

Koyfin - Our platform provides comprehensive investment research on various asset classes, such as equities, fixed income, funds, ETFs, and foreign exchange. Signup Here

Tikr - A software analytics platform used to track stocks. Tikr aggregates the best investment resources into one comprehensive platform for a fraction of the price. Signup Here

FinTip - An education and content-based app. that includes a competition-based game designed to engage, help and educate to make better investment decisions. Download here

A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of February 13

🗂️ Broker Ratings

1. Goodman Group (GMG) - Downgrade to Hold from Add (Morgans)

2. Inghams Group (ING) - Upgrade to Outperform from Neutral (Macquarie)

3. Whitehaven Coal (WHC) - Upgrade to Hold from Sell (Bell Potter)

👨‍💼 Director Transactions

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

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 financial decisions. We strongly recommend conducting your own research before making any investment decisions.