13 January 2025 | Weekly Snapshot
Saward Dawson > Wealth Advisory Insights > Weekly Snapshot > 13 January 2025
Did you know?
The below chart shows some of 2024’s big spenders on Research & Development (R&D), which is dominated by Amazon. For some context, Amazon’s R&D spend was approx. 4x as much as the combined profits from CBA and BHP!
Market Movements
The ASX200 finished the week +0.53% higher, while US equities ended the week lower as markets participants filter back and volumes start to pick back up after the Christmas /New Year break. The Dow fell 1.86%, the S&P 500 fell 1.94%, and Nasdaq was down 2.34% last week as growth and inflation data came in the hotter side, continuing the recent trend from late last year. In the US the December nonfarm payrolls report showed a 256K jobs gain on Friday night, a decent beat on the 155K consensus with the unemployment rate unexpectedly falling to 4.1% (from 4.2% in November). On the back of this, the US 10 Year Bond yield rose to its highest since late 2023, with markets now pricing in less than 30 basis points of cuts for CY2025 and the next rate cut now not expected in the USA until October 2025.
In Australia Insignia Financial was the strongest performing stock on the ASX200, rising 16.38%. The financial advisory company received a takeover offer of A$4.30 per share from CC Capital Partners, with this offer being 7.5% higher than Bain Capital’s previous bid of A$4.00, which Insignia rejected as inadequate. At the other end of the ledger, Star Entertainment Group, the casino operator, fell 42.1% with the company’s operations consuming more cash than expected, likely due to weaker revenue from its casinos (lower gaming and entertainment activity), higher operating expenses and rising debt servicing costs.
The ASX Healthcare index was the best performing sector last week rising 1.5%, driven by Sigma Healthcare that gained 7.91% and Pro Medicus gaining 5.92%. The Consumer Staples index was the weakest the last week, falling -1.56%, led by Treasury Wine States which fell -3.9% and A2 Milk who fell 3.49%.
On the S&P500 Constellation Energy was up 20.92% following the announcement it is acquiring Calpine, the largest generator of electricity from natural gas and geothermal resources in the US, and increased earnings guidance. Constellation Brands fell 18.07% over the week, making it one of the worst performers in the S&P. The wine, beer, and spirits company who has more than 100 brands fell after it cut its growth outlook for a second time this fiscal year, after the US drinks maker missed quarterly sales estimates citing lacklustre consumer demand.
Portfolio Movements
NAB pushes for 3 rate cuts this year
- The NAB CEO believes that the economy is at the hardest part of the economic cycle and things will get better from here. Recent tax cuts are resulting in growing bank deposits. Pressure will remain on households but the impact of the first cut will be significant on the psyche of consumers.
- The RBA has kept rates at a decade-high of 4.35% for more than a year, placing high pressure on mortgage holders. Whilst inflation has slowed so has GDP which has hit the slowest rate of growth in 20 years. This is expected to rebound to 1% in the Dec quarter and 1.5% by the end of this year.
- NAB is expecting 3 cuts with the first in May but CBA and WBC expect to see 4 with CBA seeing the first in Feb. ANZ only expects 2 cuts. The weakness in the $AUD will also be a consideration when the RBA meets in Feb.
Meta (Facebook) terminating Diversity, Equity, and Inclusion (DEI) programs
- According to a new employee memo citied over the weekend, Meta, the owner of Facebook, is ending DEI programs for hiring, training, and suppliers, citing the changing “legal and policy landscape surrounding diversity, equity, and inclusion efforts in the United States” including recent Supreme Court rulings against the practices. This comes after last week’s announcement they were ending use of third-party fact checkers on its platforms.
- Teams focused on DE&I will be disbanded and Meta’s chief diversity officer will take new role at the company focused on accessibility and engagement.
- There have been some noticeable shifts away from Progressive corporate policies the past few weeks ahead of Trump’s inauguration on Monday next week.
Constellation Energy ups FY24 and FY25 guidance – Shares surge
- Following the announcement last week that leading US utility Constellation Energy is acquiring Calpine, the largest generator of electricity from natural gas and geothermal resources in the US for $16.4 billion, they increased earnings guidance for both the current FY24 and FY25.
- Constellation now expects EPS to exceed top end of guidance range of $8.40 for CY24 when the report Q4 results shortly which is ahead of the current $8.27 estimate.
- For FY2025 they now expect standalone adjusted EPS in the $8.90-9.60 range with the midpoint well ahead of the $9.09 consensus with shares surging 25% on the news.
The Week Ahead
- Wednesday: USA PPI Final Demand Month on Month (MoM) expected to be +0.4%, in line with the previous reading, and PPI Final Demand Year on Year (YoY) is expected to be 3.5% compared with the prior reading of 3.0%.
- Thursday: US CPI MoM expected to be 0.3% in line with the November reading of 0.3%, and CPI YoY is expected to be 2.9% up from 2.7% in November. In Australia the Unemployment Rate is expected to rise to 4.0% from 3.9% and the Employment Change is expected to slow to 15k from 35.6k.
- Friday: US Retail Sales MoM are expected to be 0.6% in December, compared with 0.7% in November, and Initial Jobless Claims are expected to rise to 210k, up from 201k the previous week.
Saward Dawson Wealth Advisors Pty Ltd, a Corporate Authorised Representative of Akambo Pty Ltd t/a Accountants Private Advice
The information presented in this publication is general information only, and is not intended to be financial product advice. It has not been prepared taking into account your investment objectives, financial situation or needs, and should not be used as the basis for making an investment decision. Before making any investment decision you need to consider (with your financial adviser) your particular investment needs, objectives and financial circumstances.
Some numerical figures in this publication have been subject to rounding adjustments. Akambo Pty Ltd (including any of its directors, officers or employees) will not accept liability for any loss or damage as a result of any reliance on this information. The market commentary reflect Akambo Pty Ltd’s views and beliefs at the time of preparation, which are subject to change without notice.