14 October 2024 | Weekly Snapshot

Did you know?

Microsoft was founded in 1975 and has grown to one of the 5 largest companies across the globe almost 50 years later, defying consensus economic theories around business life cycles. Key to their ongoing success has been their ability to grow revenue streams in new areas. In 2024, Microsoft will spend US$40bn on R&D. Only Amazon and Alphabet spend more. Interesting to think about what future revenue opportunities they might unlock.




Market Movements

The ASX finished the week 0.79% higher, after falling 0.76% the previous week. Life360, the location-based services company that provides a popular family safety and location-sharing app, was one of the strongest on the ASX200 during the week, rising 8.93% on the back of growing optimism about its revenue and earnings growth potential. Analysts have pointed to Life360’s strong subscription growth, price increases, and the possibility of incorporating advertising into its revenue stream. Sigma Healthcare, the distributor and wholesaler of pharmaceutical products dropped 9.07% last week following one of its substantial shareholders, HMC Capital, disclosing that it has continued to sell its holding in the Company.

The ASX Information and Technology Index gained 2.46%, with Life360 assisting this performance, along with SiteMinder Limited, the software company that provides cloud-based software solutions for the hospitality industry up 8.3% and Xero Ltd, the accounting software provider up 3.01%. The ASX Energy Index fell -1.87% over the week, with Deep Yellow, the uranium exploration miner falling -5.65% and Ampol Ltd, the petrol refiner and retailer, down 4.7%.



US equities were higher on Friday night, closing out another positive week with the S&P 500 up 1.11%, Nasdaq up 1.13% and the Dow up 1.21% last week. This marks the 5th consecutive up week for the S&P 500, and it also hit an all-time high finishing above 5,800. Uber Technologies, the ride hailing services business, was up 16.9% over the week after Elon Musk and Tesla unveiled its ‘robotaxi’ called Cybercab, who is seen as a potential threat to Uber. However, the unveiling was seen as underwhelming as Tesla offered few details on the carmaker’s plans for the self-driving vehicle service that could compete with ride-hailing. Consequently, Tesla fell -12.4% over the week to be one the weakest performer on the S&P 500.



Portfolio Movements

US Market –Third Quarter Earnings Reporting Season

  • Q3 Earnings Reporting Season is kicking off in the US. The expected earnings growth rate for the S&P 500 is sitting at 4.4% (having been revised down from 8.3% at the beginning of Q3). It is expected to be the 5th straight quarter of year-over-year earnings growth for the index. With just 6% of S&P 500 companies having reported the earnings growth rate is 4.1%.
  • The estimated net profit margin for the S&P 500 for Q3 2024 is 12.1%, which is below the previous quarter’s net profit margin of 12.2% and below the year-ago net profit margin of 12.2%, but above the 5-year average of 11.5%.
  • This week there are 43 S&P 500 companies scheduled to report Q3 results.

Woodside completes Tellurian acquisition

  • Woodside announced they have completed the acquisition of Tellurian and its US Gulf Coast Driftwood LNG development opportunity for approximately $900 million cash. The implied enterprise value is approximately $1.2 billion. They have renamed the Driftwood LNG development opportunity to Woodside Louisiana LNG.
  • Woodside Louisiana LNG is an under-construction, pre-final investment decision (FID), LNG production and export terminal in Calcasieu Parish, Louisiana. It is a high-quality, scalable development opportunity, with a total permitted capacity of 27.6 million tonnes per annum.
  • Woodside CEO Meg O’Neill said bringing Woodside Louisiana LNG into the global portfolio represented a significant new chapter for the company. “This is a major growth opportunity that significantly expands our US LNG position, enabling us to better serve global customers and capture further marketing optimisation opportunities across both the Atlantic and Pacific Basins”

US Department of Justice considering breakup of Google

  • The DoJ said in a court filing that it is weighing remedies that would prevent Alphabet’s Google from using products to advantage search and search-related products, including AI, over rivals or new entrants, and could include banning search deals to make Google default on mobile phones, to separation of Chrome, Play, and Android.
  • It followed an order by federal judge for Google to lift restrictions around rival app stores and billing systems around Google Play Store with big US tech stocks coming increasing under the scrutiny of global competition regulators.
  • Analysts have noted an outright breakup is unlikely and would be in court for years. Final remedies from the DoJ are expected in late November.


The Week Ahead

  • Tuesday: US Empire Manufacturing is expected to print at 3.6 in October, compared with the prior reading of 11.5
  • Thursday: US Initial Job Claims are expected to show a reading of 253k, compared with the previous month’s reading of 258k, while Continuing Claims is expected to be 1.888 million compared with the previous reading of 1.861million. US Retail Sales are expected to be 0.3% Month on Month (MoM), compared to the previous reading of 0.1% and Retail Sales Ex Auto are expected to be 0.2% MoM compared to the previous 0.1%.
  • Friday: US Industrial Production MoM is expected to be -0.1% for September, compared with the previous month of 0.8%, while September Housing Starts are expected to show 1.35m starts compared with 1.356m in the previous months, while Building Starts are expected to print at 1.455m compared with 1.47m in the previous month. Chinese GDP Year on Year (YoY) is expected to grow at 4.5% for Q3, compared to the previous quarter reading of 4.7%

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.