20 January 2025 | Weekly Snapshot

Did you know?

Macquarie Bank has just overtaken ANZ as the 6th largest stock on the ASX. Over the past 10 years, the market capitalisation of Macquarie has quadrupled to nearly $90 billion, while ANZ, NAB and Westpac have remained roughly the same size.




Market Movements

The ASX200 finished the week +0.20% higher, while US equities had a strong week with the Dow up 3.69%, the S&P 500 up 2.91%, and Nasdaq up 2.45%, driven by better-than-expected corporate earnings, improved economic data, and optimism surrounding inflation moderating faster than anticipated.

In Australia, Star Entertainment Group was the strongest performing stock on the ASX200, rising 27.27%, following market optimism around regulatory approvals for its proposed operational restructuring and indications of improved compliance with state gaming laws, however, its future remains uncertain. Ingenia Communities Group gained 14.53%, and Liontown Resources was up 14.41% amid strong demand for critical minerals. At the other end of the ledger, Premier Investments was the weakest performer, falling 13.98%, due to concerns over retail sales and higher operating costs. Netwealth Group and Hub24 followed, falling 12.08% and 9.41%, respectively.

The ASX Energy index was the best-performing sector last week, rising 3.19%, driven by a 10.42% gain in Boss Energy and a 9.10% rise in Paladin Energy, as uranium prices climbed due to increasing global demand for nuclear energy and tighter supply constraints in key producing regions. The Information Technology index was the weakest, falling -3.12%, with WiseTech Global declining 6.73% and Technology One down 5.47% amid broader tech sector headwinds.



In the US, the December Consumer Price Index (CPI) report showed a 0.3% month-over-month increase for CPI Ex Food and Energy, slightly below the expected 0.4%, while the annual rate was 2.9%, also below the 3.0% consensus. The December Producer Price Index (PPI) Final Demand rose 0.4% month-over-month and 3.5% year-over-year, both meeting expectations. These readings suggested moderating price pressures, easing fears of aggressive monetary tightening. The US 10-Year Bond yield fell during the week, closing at 4.627%, after reaching an intraday high of 4.804% earlier in the week, potentially reflecting easing inflation expectations. Interest rate futures now suggest the first Federal Reserve rate cut is likely to occur at the end of July 2025, with only around 35 basis points of rate cuts priced in for the year.

On the S&P 500, Builders FirstSource, who manufactures and distributes building products to professional homebuilders, was the best-performing stock, gaining 17.26% on strong housing demand driven by declining mortgage rates, a surge in home renovation projects, and robust activity in new construction, alongside increased earnings guidance. United Rentals, an equipment rental company, rose 14.91%, while Schlumberger gained 12.84% on strong oilfield services demand. Moderna was the worst-performing stock, falling 19.38% as the company’s updated vaccine rollout faced delays. Charles River Laboratories and Eli Lilly followed, falling 12.15% and 9.27%, respectively, due to mixed earnings reports and outlook adjustments.



Portfolio Movements

 Telstra reported to invest $700 mill in firm wide AI rollout

  • Reports that Telstra is set to announced they will spend $700 million with US consulting giant and long-term partner Accenture to roll out artificial intelligence across its entire business making it the biggest AI deployments in the country.
  • Telstra said last year that Accenture would help it “rapidly scale” the AI systems after trialling it across around 10% of their workforce, claiming it could “really shift the dial when it comes to helping our teams provide quicker, more effective, and more personalised customer interactions”.

Microsoft adds Copilot and Designer to Microsoft 365 Personal and Family subscribers – ups prices

  • Microsoft announced on Friday they are adding Copilot and Designer AI functionality to Microsoft 365 Personal and Family subscribers and raising prices by $3 month, or a 28% increase over 12 months.
  • The company noted “Since we launched Microsoft 365 (formerly Office 365) to consumers in 2013, we’ve steadily delivered new apps, features, and benefits to our subscribers. These include advanced security with Microsoft Defender, creative tools like Microsoft Clipchamp, and countless enhancements to Word, Excel, PowerPoint, OneNote, and Outlook.
  • Adding “We’re building on those 12 years of innovation by bringing Microsoft Copilot and Microsoft Designer to Microsoft 365 Personal and Family subscribers in most markets worldwide.” These changes bring the transformative power of AI to the personal productivity tools that millions of people use every day”.

Q4 earnings expected to rise 11.9%

  • According to FactSet, S&P 500 earnings are expected to rise 11.9% from Q4 last year which would the highest year-over-year earnings growth rate reported since Q4 2021.
  • With just 9% of S&P 500 companies reporting actual results so far, the earnings season is off to a good start with the blended earnings growth rate of 12.5% although the early part of reporting season is dominated by Financials which are also expected to be the largest contributor to S&P 500 year on year earnings growth.
  • The forward 12-month P/E ratio for the S&P 500 is 21.6. This P/E ratio is above the 5-year average of 19.7 and above the 10-year average of 18.2 so there is a higher bar this earnings season with high valuations and high earnings growth expectations. There are 43 S&P 500 companies (including 6 Dow components) scheduled to report results this week.


The Week Ahead

  • Monday: USA The inauguration of Donald Trump as the 47th president of the United States
  • Thursday: US Leading Index expected to be -0.1% for December, a drop from the previous reading of 0.3%.
  • Friday: US Initial Jobless Claims are expected to rise to 220k, up from 217k the previous week, Continuing Claims expected to be 1.868m up from 1.859m, University of Michigan Sentiment expected to be unchanged for the January forecast at 73.2, Existing Home Sales MoM is expected to rise to 4.2m from 4.15m, S&P Global US MFG PMI is expected to rise to 49.9 from 49.4 and S&P Global US Services PMI is expected to fall slightly to 56.5 from 56.8. United Kingdom S&P Global UK Manufacturing PMI expected to be unchanged at 47.0 while S&P Global UK Services PMI is expected to contract to 50.8 from 54.1.

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.