7 October 2024 | Weekly Snapshot

Did you know?

The below table shows the top 10 largest companies in the US markets by each decade.

Market Movements

The ASX finished 0.76% lower over the week, after being up 0.03% in the previous week. REA Group, who owns realestate.com, was up 9.36% over the week, after the Company withdrew its offer for Rightmove, the British real estate portal. Despite walking away from the deal, REA Group remains focused on other growth opportunities, including its expansion in adjacent markets like India.

Westpac Bank fell 5.22% last week after announcing the sale of its auto finance loans and lease receivables business. While this move is part of Westpac’s ongoing divestment strategy in the auto finance sector, its shares fell more than 1% after the announcement. Additionally, Westpac, along with other major Australian banks, has been facing selling pressure as investors have been rotating out of banking stocks.

The ASX Energy Index rallied 6.73%, on the back of moves higher in the oil price over the week which saw Woodside Energy up 9.3% and Santos Ltd up 6.73%. The ASX Consumer Discretionary Index fell -2.55%, with ARB, who sells accessories including bull bars and other equipment for four-wheel drives fell -8.1% after Australian new car sales experienced a decline in September 2024, marking the second consecutive month of reduced deliveries. Overall, new vehicle sales were down by 12.4% compared to the same period in 2023.

US equities were higher on Friday night, closing out a flat week with the S&P 500 up 0.22% following its 0.62% gain last week and marking the fourth consecutive up week, while the Nasdaq finished up 0.10% for the week and the DOW was up 0.09%.

Constellation Energy was one of the strongest performers, rising 9.81%, following comments by the CEO of Alphabet that Google is evaluating procuring nuclear power for its data centres as well as small modular reactors (SMRs), providing further support for rising base load power prices.

Nike was one of the weakest performers last week falling 8.04% after the company reported mixed financial results for its first quarter of 2025. A key contributor to the stock drop was Nike’s decision to withdraw its full-year guidance and postpone its scheduled Investor Day. This uncertainty, along with lower-than-expected revenue, raised concerns among investors about Nike’s immediate growth.

Portfolio Movements

 Rio Tinto confirms approach to Arcadium Lithium

• Rio Tinto has confirmed that it has made an approach to Arcadium Lithium regarding a potential acquisition of the company. The approach is non-binding and there is no certainty that any transaction will be agreed to or will proceed.
• The announcement followed reports over the weekend that Rio Tinto is in talks to acquire the dual-listed global lithium miner (ASX code LTM) for between $US4 billion and $US6 billion.
• Rio Tinto said they will not make further comment until or unless an update is appropriate. Arcadium Lithium confirmed the approach but also said they will not comment further unless and until there is news to share. Lithium stocks have been amongst the poorer performers on the ASX in 2024

Google looking to utilize nuclear power for its data centres

• Following on from Microsoft’s announcement the other week, Google CEO Sundar Pichai has said they are also evaluating potential options for using nuclear energy to power its data centres, as part of its efforts to achieve its net-zero 2030 net-zero emissions goal and amid the increased electricity demands of generative AI that renewables are not able to keep up with.
• Pichai said that while the net zero target was “ambitious”, the company continues to work towards it, and that “Obviously, the trajectory of AI investments has added to the scale of the task needed. We are now looking at additional investments, be it solar, and evaluating technologies like small modular nuclear reactors, etc.”

REA abandons Righmove takeover

• After UK listed Rightmove rejected REA’s 4th takeover offer, REA has withdrawn their offer saying they are committed to their capital allocation framework and maintains a disciplined approach to mergers and acquisitions.
• REA said their approach to Rightmove’s Board was driven by a clear strategic rationale and the opportunity to create a global and diversified digital property company, with strong margins and significant cash generation, underpinned by number one positions in Australia and the UK.
• REA CEO Owen Wilson added “Against a backdrop of intensifying global competition, we approached Rightmove’s Board because we strongly believed in the opportunity to create a globally diversified leader in the digital property sector that would benefit both REA and Rightmove shareholders. We were disappointed with the limited engagement from Rightmove that impeded our ability to make a firm offer within the timetable available.

The Week Ahead

• Tuesday: US Trade Balance is expected to be -US$70.5 billion compared with the prior reading of US$78.8b
• Thursday: US Initial Job Claims are expected to show a reading of 230k, compared with the previous month’s reading of 225k, while Continuing Claims is expected to be 1.832 million compared with the previous month of 1.826 million. CPI is expected to show a MoM (Month on Month) increase of 0.1% compared with 0.2% in August, while ex Food and Energy it is expected to read 0.2% versus 0.3% in the prior month. Year on Year (YoY) CPI is expected to come in at 2.3% compared with 2.5% and ex Food and Energy it is expected to be 3.2%, flat on the previous year.
• Friday: The US Producer Price Index (PPI) Final Demand MoM is expected to be 0.1%, down slightly on the August number of 0.2, and the University of Michigan Sentiment is expected to be slightly strong at 70.5 compared with previous reading of 70.1