Tech's Two-Day Tumble Takes ASX to Two-Week Low

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The Australian share market declined to a two-week low on Wednesday, with the S&P/ASX 200 index dropping 0.5% to 8,355.6 points. The Technology (-1.35%) sector was particularly hard hit, following yesterday’s 4% decline, with Wisetech (-3.03%) leading the losses.

The market weakness reflected cautious trading ahead of crucial U.S. inflation data, with the November consumer price index report due tomorrow. Following a subdued session on Wall Street, this data is expected to play a key role in the Federal Reserve's upcoming interest rate decision.

The Industrials (-1.02%) and Energy (-1.00%) sectors also saw sharp falls, with Computershare (-3.53%) and Ampol (-2.32%) a couple of the companies to see significant price falls. The Real Estate (+0.81%) was the day’s best performer, boosted by a rise in Goodman Group’s (+1.70%) share price.

Company News

• Regional Express (-) and four directors face legal action from ASIC over allegations they misled investors by projecting a positive financial outlook in February 2023 despite knowing they wouldn't be profitable and waiting until June to update the market.

• Sigma Healthcare (-0.18%) plans to release merger documentation for shareholder voting on the proposed Chemist Warehouse Group deal by the end of 2024. The merger is expected to be completed in February 2025.

• South32 (-4.62%) has withdrawn production guidance for its Mozal Aluminium operation due to civil unrest disrupting raw material transport in Mozambique.

• Vulcan Energy Resources (-) went into a trading halt as the company seeks to raise $164 million.

Wall Street

Wall Street's major indexes closed lower on Tuesday, with the Dow Jones falling 0.35%, the S&P 500 dropping 0.30%, and the Nasdaq declining 0.25%. The Technology (-1.26%) and Real Estate (-1.63%) sectors led the losses, particularly impacted by Oracle's 6.7% drop following disappointing second-quarter results. The Communications Services (+2.61%) sector provided positive momentum thanks to Alphabets’ 5.6% rally after its chip announcement.

Investors remained focused on upcoming inflation data, with the November Consumer Price Index report due Wednesday and the Producer Price Index on Thursday. Both data points could influence the Federal Reserve's upcoming interest rate decisions. Market expectations for a rate cut next week are high, with CME's FedWatch Tool showing an 86% chance, influenced by recent employment data showing increased unemployment and job growth recovery.

Oracle (-6.67%) shares dropped after the company reported second-quarter earnings of $1.47 per share and revenue of $14.06 billion, both missing analyst expectations. Despite cloud services revenue growing 12% to $10.81 billion and net income rising 26%, the company's weaker forecast disappointed investors.

S&P500 Sector Performance

Economic Data

• Germany’s annual inflation rate rose to 2.2% in November 2024, up from 2.0% in October, in line with preliminary estimates, marking the highest level in four months.

• U.S. Nonfarm unit labour costs were revised down to a 0.8% increase in the third quarter of 2024.

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🌎️ Around The Globe

• Amazon has partnered with Intuit to integrate QuickBooks into its Seller Central platform by mid-2025. The collaboration will give Amazon sellers access to QuickBooks' accounting tools and potential loan opportunities through QuickBooks Capital.

• Arabica coffee prices have hit a historic high of $US3.48 per pound, breaking records dating back to 1972 and surpassing the previous peak from 1977.

• China has launched an anti-monopoly investigation into Nvidia, though the specifics of the alleged violations haven't been disclosed. The probe is being viewed as retaliation against U.S. restrictions on China's semiconductor industry.

• A federal judge blocked Kroger's $25-billion merger with Albertsons following FTC opposition. The decision came after a Portland trial where the FTC argued the merger would reduce competition and harm consumers and workers.

• Google unveiled its Willow quantum chip, a 4cm squared processor that dramatically outperforms traditional computers. It can complete certain calculations in minutes instead of septillions of years. The chip aims to advance AI and medical research while addressing encryption security challenges through post-quantum standards.

• Omnicom is acquiring Interpublic Group for $13.25 billion, combining two advertising giants whose clients include Apple, Disney, Mattel, and Johnson & Johnson. The merger is set to create the world's largest advertising agency, with potential annual revenues of $25 billion.

• OpenAI has released Sora, its AI video generation model, to ChatGPT Plus and Pro subscribers. The platform features the new 'Turbo' model for faster generation of up to 20-second videos in multiple aspect ratios and tools for organising content and viewing community prompts.

• Police arrested 26-year-old Luigi Mangione for the murder of UnitedHealthcare CEO Brian Thompson. Found at a Pennsylvania McDonald's with a "ghost gun," he faces multiple charges, including murder in Manhattan and firearms violations in Pennsylvania.

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