6 January 2025 | Weekly Snapshot

Did you know?

Elon Musk’s net worth stands at US$455bn according to Forbes. If Elon was a listed company, it means that Elon would be ranked as the 18th largest company on the S&P500.

Market Movements

In a shortened trading week over the New Year, the ASX200 gained +0.19%. US equities were stronger Friday night, closing out the week in which the Dow gained 0.37%, the S&P +0.60%, and the Nasdaq finished up 0.69%. 2024 was a year in which stocks, particularly those of US technology companies, outshone virtually every other asset class. The ASX200 (before dividends) gained 7.48% in 2024, and the S&P 500 gained 23.3%, rising for the fifth time in six years, in an advance that added $10 trillion to US equity values. The MSCI All-Country World Index climbed 17%. In fixed income, the Vanguard Total Bond market exchange-traded fund finished with a gain of 1.5% including dividends, while the Bloomberg Commodity Index was essentially unchanged.

Australian uranium miners had a strong week, with Deep Yellow rising 13.3%, Boss Energy up 9.6% and Paladin Energy up 8.01% driven by Cameco, one of the world’s largest uranium producers, announcing the suspension of operations at its Inkai joint venture in Kazakhstan. This unexpected halt was due to delays in receiving necessary documentation from Kazakhstan’s Ministry of Energy, leading to a production stoppage to comply with local regulations. Amongst the Australian companies to trade lower over the week was Guzman Y Gomez down -3.3% and Life360 Inc down -2.51%. There was no specific news for either company, and given both have had very strong years, with Guzman Y Gomez up around 80% since listing in June 2024 and Life360 up around 200% over 2024, it may have simply been a case of investors locking in some profits.

The ASX Energy index was the best performing sector last week rising 3.3%, driven by Deep Yellow, Boss Energy and Paladin Energy. The Consumer Discretionary sector was the weakest the last week, falling -0.5%, led by Guzman Y Gomez, down -3.3%, Bapcor Ltd down -2.5% and JB Hi Fi which closed -1.7% lower.

On the S&P500 Vistra Corp, an integrated retail electricity and power generation company based in Texas that operates a portfolio of power generation assets, including natural gas, nuclear, solar, and battery energy storage facilities, rallied 15.9% largely attributed to growing investor optimism about the rising electricity demand from artificial intelligence (AI) data centres and Constellation Energy gained 11.5% after it announced that they will supply the GSA (Government Services Administration) over 1M megawatt hours annually for ten years from 2025. This equates to powering over one million homes annually. While Brown-Forman Corp, who makes whiskey, vodka, tequila, bourbon, and gin and is the owner of the bran Jack Daniels, fell -3.90%, along with the shares of other drinks makers after the US Surgeon General said labels on alcohol products like beer and wine should carry warnings of their links to cancer. Constellation Brands Inc. slumped as much as 2.3% and Molson Coors Beverage Co. lost nearly 5%. In Brussels, Anheuser-Busch InBev NV, the maker of Budweiser beer, fell 2.8%.

Portfolio Movements

US prospects for 2025 remain solid

• US equity analysts are calling for an average S&P 2025 year-end target of 6588, 12% higher than the year end close. This would mean the third positive year after the previous 2 years of 20%+ rallies.
• The positive outlook is due to expectations around continued economic growth, consumer spending, solid real income growth, healthy household balance sheets and fiscal-policy tailwinds. Inflation has eased but Trump’s tariff proposals are considered a wild card.
• Oil finished the year unchanged after falling over 10% in 2023. Softer demand outlook for 2025 has seen both OPEC and IEA slash their oil forecasts despite OPEC’s plan to keep its output cuts until April. Expectations are for prices to settle around $64-65 per barrel in 2025. This is helped by expectations Trump will prioritize keeping oil prices low at all costs.

Microsoft extends its massive AI spend

• Microsoft says it will spend $80B on construction of AI data centres in FY25. More than half of this spend will occur in the US. The company had previously guided for FQ2 capex to increase sequentially from the $20B the company spent in FQ1.
• Microsoft is conscious of ensuring its technology is adapted across the world and last year committed to investing over $35B in 14 countries within 3 years to build trusted and secure AI and cloud datacentre infrastructure. This is a part of a global infrastructure network that now reaches 40 countries, including the Global South where China’s Belt and Road investments are focused.
• Microsoft has also committed to train 2.5M American students, workers and community members with AI skills. This includes working with the government and colleges, providing AI bootcamps for students and new AI training programs for teachers.

Constellation Energy signs major government deal

• Constellation Energy announced that they will supply the GSA (Government Services Administration) over 1M megawatt hours annually for ten years from 2025. This equates to powering over one million homes annually.
• The contract is worth $840M and is the largest US government contract ever. A portion of the power will come from investments Constellation will make to increase plant output and supply over 80 federal facilities. This will allow the GSA to transition to 100% carbon-free electricity by 2030.
• Constellation was also awarded a $172M Energy Savings Performance Contract to perform energy savings and conservation measures at five GSA-owned facilities. The contracts allow Constellation to extend the licenses of existing nuclear plants and invest in new equipment and technology that will increase output by 135 carbon-free megawatts.

The Week Ahead

• Tuesday: USA S&P Global US Services PMI is expected to be 58.5 for December, in line with the prior reading, Factory Orders are expected to fall -0.4% for November, compared with the prior reading of +0.2% and Durable Goods Orders are expected to show a drop of -0.4% in November, an improvement on the previous reading of -1.1%. Australia Building Approvals Month on Month (MoM) are expected to show a fall of -1.0% for November compared with +4.2% growth in October.
• Wednesday: USA Trade Balance expected to show an increased deficit of -$78.2 billion compared with the prior -$73. Billion and the ISM Services Index is expected to be 53.5 in December compared with 52.1 in November. Australia CPI Year on Year (YoY) is expected to show inflation running at 2.2% compared with 2.1% YoY in October.
• Thursday: US Initial Jobless Claims are expected to be 216K compared with 211k last week and ADP Employment Change is expected to show 133k jobs were added in December compared with 146k in November. Australia Retail Sales MoM are expected to show 1.0% in November compared with 0.6% in October, and the Trade Balance is expected to be A$5.5b compared with the prior reading of A$5.9b. China CPI YoY expected to be 0.1% for December compared with 0.2% in November and M2 Money Supply is expected to show growth of 7.3% in December compared with 7.1% growth in November.