From Pharmacy Mergers to Trump Surgers: Post-Election Winners & Losers

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Welcome to Equity Espresso’s Market Recap.

In a choppy trading session, the Australian market staged a late comeback after spending most of the day in negative territory. The S&P/ASX 200 index ultimately closed 0.3% higher at 8,226.30, though the gains were modest compared to Wall Street's record-breaking rally after Donald Trump's election victory.

The Real Estate (-2.11%) sector felt the most pressure, dropping due to concerns about Trump's inflationary policies that could keep interest rates high. Goodman Group (-2.43%) and GPT Group (-4.13%) were some of the notable downward movers. Utilities (-0.64%), another interest rate-sensitive sector, also fell on inflation concerns.

The Materials (+0.42%) sector had a mixed performance as investors weighed two competing factors:

• Concerns about Trump's tariffs potentially dampening Chinese demand for commodities,

• Optimism about an anticipated Chinese fiscal stimulus package, which is expected to be announced on Friday.

Gold prices held steady at US$2,650/oz on Thursday, following a sharp 3% decline to three-week lows in the previous session. The drop was driven by a strengthening dollar and reduced safe-haven demand after Trump's victory, with markets expecting the Federal Reserve to maintain higher interest rates. Northern Star Resources (-6.30%), Evolution Mining (-6.46%), Perseus Mining (-6.93%) and Westgold Resources (-8.39%) were just some of the heavy hitters to fall.

Company News

• Sigma Healthcare (+24.94%) and Chemist Warehouse’s proposed merger has been approved by the ACCC. Sigma, a pharmacy wholesaler and franchisor of brands like Amcal+, will combine with Chemist Warehouse's retail network. The competition watchdog concluded the merger won't significantly reduce competition in the pharmacy sector.

• NAB (+0.20%) reported a 6.1% decline in statutory profit to $7 billion for FY24, primarily due to intense home lending competition and margin pressure. While increasing its total dividend to $1.69, the bank saw revenue fall 2% from lower interest margins and treasury income. Despite loan and deposit growth of around 4%, expenses rose 4.5% due to higher personnel costs and technology investments.

• NIB's (+1.86%) Australian health insurance division reported a strong 53% growth in the first four months of FY2025 but faces rising medical costs. Benefits paid to members increased by 10.7%, outpacing the 6.4% rise in contributions, creating ongoing pressure.

• Neuren Pharmaceuticals (+8.52%) is forecasting FY2024 income of $216-218 million, bolstered by a $17 million New Zealand tax credit. Its partner Acadia Pharmaceuticals reported Dayue drug sales of US$251.7 million year-to-date, with full-year guidance set at US$340-350 million, of which Neuren receives a portion.

Wall Street

U.S. stocks experienced a historic rally following Donald Trump's victory in the 2024 presidential election, with all three major indexes reaching record highs. The Dow Jones (+3.57%) surged, while the S&P 500 (+2.53%) and Nasdaq (+2.95%) marked their biggest daily gains since late 2022.

The victory triggered strong performance in "Trump-linked stocks," with the Financial sector soaring 6.16%, Bitcoin reaching a new record above $76,000, and U.S. Treasury yields climbing significantly, with the 10-year note hitting a four-month high of 4.479%.

However, not all sectors benefited from the rally, as rate-sensitive Real Estate (-2.64%) and Consumer Staples (-1.57%) stocks declined. Investors began reassessing the Federal Reserve's interest rate trajectory in light of potential Trump policies that could boost inflation, with traders adjusting their expectations for future rate cuts despite an anticipated 25-basis-point reduction at the upcoming Fed meeting.

Stocks linked to Donald Trump saw significant gains as the Republican secured his return to the presidency. Trump Media & Technology (+5.94%) jumped, while Tesla (+14.75%) shares experienced a dramatic surge following its CEO Elon Musk's public endorsement of Trump.

S&P500 Sector Performance

Economic Data

• Australia's Trade Surplus on goods declined to $4.61 billion in September 2024 from $5.28 billion in August, falling short of market expectations for a gain of $5.30 billion.

• Australian Building Permits approved increased by 4.4% month-on-month to 14,842 units in September 2024, consistent with preliminary estimates and rebounding from a 3.9% decline in August.

• Japan’s nominal wages increased by 2.8% year-on-year in September 2024, maintaining the same pace as in August and aligning with market expectations.

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🌎️ Around The Globe

• Albemarle, the world’s top lithium producer, reported a $1 billion Q3 loss amid a 71% price drop for the battery metal. The company expects prices to remain low at $12-15 per kilogram, forcing the company to cut spending.

• Amazon's CEO Andy Jassy refuted claims that their new five-day office mandate was intended as a covert layoff strategy or resulted from city agreements, defending the shift from the previous three-day requirement at a recent all-hands meeting.

• Apple faces a potential €38 billion fine under the Digital Markets Act for App Store violations, despite recent policy changes. The landmark penalty could reach 10% of global sales or 5% of daily revenue for the tech giant.

• Netflix offices in Paris and Amsterdam were raided by French and Dutch authorities investigating alleged tax fraud and corruption. The probe, opened in November 2022, involves accusations of aggravated tax fraud and concealed work conspiracy.

• Nintendo reduced its Switch sales forecast from 13.5 million to 12.5 million units for fiscal year 2025 amid declining demand for the aging console. The company also lowered revenue and profit forecasts while investors await news of a successor device.

• Novo Nordisk reported strong Q3 Wegovy sales, with revenue up 79% to 17.3 billion Danish kroner ($2.5 billion), surpassing estimates. The weight-loss drug's performance sent shares up 9%.

• OpenAI has acquired Chat(.)com, one of the web's oldest domains, which now redirects to ChatGPT. The domain, registered in 1996, was previously purchased by HubSpot's co-founder for $15.5 million in a record-breaking sale.

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*1-year, 3-year and 5-year returns are calculated as of September 30 2024.

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