From Corner Office to Consulting: WiseTech's White Out

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Welcome to Equity Espresso’s Market Recap.

Australian shares showed continued weakness on Thursday, with the S&P/ASX 200 Index closing down 0.1% to 8,206.3 points, extending the market's cautious tone following Tuesday's significant 1.6% decline. This recent downturn was triggered by growing concerns about the U.S. Federal Reserve's potentially more conservative approach to interest rate cuts.

The Technology (-2.90%) sector bore the brunt of investor anxiety, tumbling in response to the Nasdaqs overnight drop in the U.S., as market participants grappled with uncertainty in global equity markets. The ASX's main index briefly touched a two-week low in early trading before recovering some ground in what proved to be a mixed session.

Despite the day’s fall, more sectors ended the day in green than red, with Telco. (+0.71%) and Financials (+0.62%), leading the way for the six sectors to finish the day higher.

In late-breaking news, Wisetech Global (-6.32%) founder Richard White has announced his immediate resignation from his roles as Director and CEO, following what the company describes as "challenging" recent weeks. White will transition to a new 10-year consulting position as Founder and Founding CEO after a short leave, focusing on product and business development while maintaining his current $1 million annual remuneration.

CFO Andrew Cartledge will step in as Interim CEO and has agreed to delay his planned retirement beyond the end of 2025 if needed, while Deputy CFO Caroline Pham will serve as Interim CFO. The company has initiated a global search for permanent CEO and CFO positions.

Company News

• Newmont (-6.27%) shares fell despite posting its highest quarterly profit in five years with $922 million in net income but still fell short of analysts' expectations for revenue and adjusted earnings.

• Brambles (-1.51%) shares fell after reporting a 3% increase in sales revenue to US$1,679.9 million for Q1 FY25, driven by pricing actions. However, overall volumes remained flat as new business growth offset US produce and Australian seasonal demand declines.

• Fortescue (-3.24%) achieved record first-quarter iron ore shipments of 47.7 million tonnes, up 4% from the previous year, with CEO Dino Otranto confirming the company is on track to meet FY25 guidance.

• Reece Group (-7.94%) shares fell after reporting a 5% drop in Q1 sales to $2.23 billion, with U.S. sales down 6.5% and flat Australasian performance. Despite projecting EBIT of $300-320 million for H1 FY25, CEO Peter Wilson remained optimistic about long-term fundamentals driven by housing demand and population growth.

Wall Street

Wall Street experienced significant declines on Wednesday, with major indices falling as rising Treasury yields put pressure on large technology companies. The Dow Jones dropped 409.94 points, the S&P 500 fell 53.78 points, and the Nasdaq lost 296.47 points, with notable tech giants like Nvidia, Apple, Meta, and Amazon all seeing drops of over 2%.

Corporate news further impacted the market downturn, with McDonald's shares falling 5.12% following an E. coli outbreak linked to their Quarter Pounders. Coca-Cola dropped 2.07% despite maintaining its profit forecast. Investors reassessing Federal Reserve rate-cut expectations amid strong economic data and the upcoming presidential election affected the broader market sentiment, with benchmark 10-year Treasury yields reaching a three-month high.

Boeing (-1.76%) shares fell following the release of devastating quarterly results, marking its worst performance since 2020. The aerospace manufacturer reported significant losses totalling over $6 billion for the quarter, with its commercial aeroplane division accounting for over $4 billion of the deficit.

Tesla (+12.10%) shares rose in after-hours trading, exceeding earnings expectations in its third-quarter report, with adjusted earnings per share of 72 cents surpassing the predicted 58 cents. Despite revenue slightly missing estimates at $25.18 billion, the company saw an 8% year-over-year increase, while net income rose to $2.17 billion, aided by $739 million in automotive regulatory credits.

S&P500 Sector Performance

Economic Data

• Australia’s Composite PMI Output Index inched higher to 49.8 in October from 49.6 in September, according to flash readings.

• Japan’s Manufacturing PMI declined to 49.0 in October 2024 from a final 49.7 in the previous month, below market forecasts of 49.9, marking the fourth straight month of contraction in factory activity.

• U.S. Existing home sales fell 1% from the previous month to a seasonally adjusted annualised rate of 3.84 million in September 2024, the lowest level since October 2010, following an upwardly revised 3.88 million in August and below forecasts of 3.9 million.

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🌎️ Around The Globe

• Former Abercrombie & Fitch CEO Mike Jeffries, along with his partner Matthew Smith and associate James Jacobson, face federal sex trafficking charges following their arrests. A BBC investigation revealed that from 2008-2015, Jeffries allegedly used the company to lure young men with modelling opportunities into coerced sexual activities.

• Anthropic has upgraded its Claude model with "computer use" capabilities, transforming it from a chatbot into an AI agent. The enhanced version can now perform computer tasks like web browsing, opening apps, and simulating keyboard and mouse inputs to execute specific tasks on behalf of users.

• BlackRock introduced two new ETFs, targeting the growing artificial intelligence market. The launch comes as generative AI technology, known for creating human-like interactions through extensive data processing, continues to gain momentum.

• Meta has banned several Threads and Instagram accounts that tracked private jets of celebrities and business leaders, including Mark Zuckerberg, Jeff Bezos, and Elon Musk. The company cited potential "physical harm" risks in its updated privacy policy despite the accounts using publicly available flight information.

• Peloton announced plans to sell its Bike+ model at select Costco locations and online from November through mid-February at discounted prices. The partnership aims to boost sales for the fitness equipment maker, which has struggled with declining demand post-pandemic but recently posted its first sales increase in nine quarters.

• Walmart announced plans to launch nationwide prescription delivery in early 2025, rivalling Amazon's healthcare initiatives. The service, already available in six states, will deliver medications alongside groceries to 86% of U.S. households in as little as 30 minutes, with expansion to 49 states planned by January's end.

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