23 September 2024 | Weekly Snapshot

Did you know?

Growth in Electric Vehicle sales rose 20% in August 2024 vs August 2023. Looking under the hood, China grew at approx. 30%, whereas the USA grew 10%. Europe was almost flat and the rest of the world (RoW) grew 30%.

Market Movements

The ASX rose 1.35% this week, extending last week’s 1.08% gain. James Hardie Industries rallied 8.8% during the week, due to a combination of factors, primarily driven by improved market sentiment around its recent earnings performance, and an improving outlook for its North American business (where it generates approx. 65% of its revenue) following the lowering of interest rates in the USA.

Computershare fell -9.73% over the week. A significant portion of Computershare’s revenue comes from interest earned on the client funds held in trust. Around 50% of Computershare’s revenue is earned in the US, so the decreasing interest rate environment is a headwind for the company’s earnings.

Over the week, financials outperformed (rising 2.37%) closely followed by Utilities (up 2.31%), while Healthcare fell -1.91%. Financials were buoyed by Zip Co Ltd, which provides ‘buy now pay later’ credit and digital payment services. Zip increased 15.58% following its readmission to the S&P ASX200 and the expectation of strong US volumes to augment solid Australian margins.

The S&P500 rose 1.36% over the week, after its strong rally the week before of 4.02%. Constellation Energy, who is a generator and retailer of nuclear, hydro, wind and solar energy, rallied 30.11% after Microsoft signed a 20-year power-purchase agreement with the Company, which will see it restart Pennsylvania’s ‘Three Mile Island’ nuclear plant. FedEx Corp, who provides worldwide express and freight delivery, was down 11.08% after warning investors its business would slow in the year ahead.

The Nasdaq was up +1.49% for the week, and the DOW +1.62%, so it was a strong week as the Fed rate cut cycle got underway with a jumbo 50 basis point cut.

Portfolio Movements

Intel – price weakness attracting attention

• The recent Intel share price weakness seems to be attracting interested parties with first reports over the weekend that Qualcomm was said to have contacted Intel to discuss a potential transaction. There were reports earlier in the month that Qualcomm was hoping to buy parts of Intel’s chip business. Latest headlines suggested Qualcomm had approached Intel to discuss a full takeover of the company which seems ambitious although Intel shares were halted on the news.
• Reports this morning that intel is also considering potential equity-like investment of as much as $5B from private equity giant Apollo. The reports noted Intel executives have been weighing Apollo’s proposal although talks are in a preliminary stage and have not been finalized with neither Intel or Apollo commenting on the news.

Woodside Energy Explores Potential Partnership for US LNG Project

• At the Gastech international gas conference in Houston last week, Woodside Energy CEO Meg O’Neill said the company is in discussions with potential partners for the recently acquired Driftwood liquefied natural gas project in the US Gulf Coast.
• O’Neill said that the project piqued the interest of infrastructure developers and counterparties in Asia and other places and the company is looking to team up with gas producers, pipeline companies and companies that share its view of LNG.
• Woodside intends to make a final investment decision on Driftwood, once partners have been agreed, with an agreement likely by Q2 next year.

Google wins EU court challenge

• The EU’s second-highest court ruled a $1.7 billion fine imposed on Google by EU regulators should be annulled.
• The fine is from 2019 when the European Commission said Google had abused its market dominance in relation to its AdSense product for Search.
• The commission fined Google 1.49 billion euros at the time. Google appealed, sending the case to the EU’s General Court, which said it upholds the majority of the findings but annuls the decision to impose the fine. The commission could appeal this decision which would send it up to European Court of Justice, the EU’s top court.

The Week Ahead

• Tuesday: The RBA meet, with consensus expecting rates to remain at 4.35%, in the US the US Treasury is selling US$69b of 2-yr notes
• Wednesday: Australian CPI Year on Year is expected to show 2.7%, compared to the prior reading of 3.5%, and the US Conference Board Consumer Confidence is expected to show a reading of 103.0, compared to the prior 103.3, and the US Treasury is selling US$70b of 5-yr notes
• Thursday: US new Home Sales are expected to show 695k compared to the prior 739K, US GDP is expected to annualise 2.9% QoQ compared to the prior reading if 3.0% and Initial Jobless Claims are expected to show a reading of 225k compared to the previous reading id 219k
• Friday: University if Michigan Sentiment Index is expected to show a reading of 69.3 compared to the prior 69.0 and US Personal Spending is expected to show growth of 0.3% compared to the prior reading of 0.5%