Good Evening,

Welcome to Equity Espresso

We’re here to catch you up on the day’s stock market news in Australia and abroad.

Here’s a sample of what you may have missed today:

1. 📈 August CPI Climbs

2. 🏥 ResMeds Broker Rise

3. 🤖 Chat GPT is about get smarter

4. 🎰 Star Entertainment's Capital Raise

5. ❌ Endeavour Gives Former Myer's Chairman Cold Shoulder

The Recap

Fuel & Housing Pushes CPI to 5.2%

Markets finished lower, but the damage wasn’t as bad as expected after a night of sharp losses on Wall Street that saw all three key indexes lose over 1%. The ASX200 didn’t fare as badly, dropping only 7.9 points or 0.1% to 7,030.3.

There were no surprises from today’s August CPI read, coming in at an annual increase of 5.2%. This was higher than July’s read of 4.9%. Housing and Transport were the largest contributors to the rise - we cover this in further detail later in the newsletter.

There weren’t many places to hide from a sector standpoint. Tech (-0.9%) and Health Care (-0.7%) were all lower. REITs (+0.4%) were one of only two sectors to finish higher, with Dexus (+2.8%) and Stockland (+1.0%) both rising.

ResMed (+4.8%) shares rose after Goldman Sachs reiterated its buy rating on the company, reducing its price target to $33.00. The broker expects weight loss drugs to have a minor impact on the sleep apnea market.

Star Entertainment Group shares finished 16% lower to $0.63 after finalising its $565 million capital raising at $0.60 a share.

Outlook

The S&P 500 (+0.35%) and NASDAQ (+0.33%) futures markets are currenlty trading higher. A quieter night for economic news in the U.S., with Durable Goods and Crude Oil inventories the key items on the calendar.

Economic News

• The U.S. consumer confidence index dropped to a four-month low in September to 103.0, the lowest reading since May from 108.7 in August.

• New home sales plunged 8.7% to a seasonally adjusted annual rate of 675,000 units in August after racing to a 17-month high in July. This was below estimates of 700,000 units.

Wall Street

An ugly night on Wall Street as both the S&P 500 (-1.4%) and NASDAQ (-1.5%) indexes fell by over 1% as Treasury yields continued to trade at multi-year highs. Benchmark 10-year Treasury yields have climbed to 16-year highs in the wake of the Federal Reserve's hawkish longer-term rate outlook last week.

All 11 S&P 500 sectors ended lower. The Utilities (-3.0%) sector fell the most, followed by Consumer Discretionary (-2.0%) and Tech (-1.8%).

Amazon dropped 4% after being sued by the Federal Trade Commission with anti-trust charges. The suit alleges that Amazon uses its “monopoly power” to hike prices and prevent rivals from competing against it.

DraftKings stock rose by just above 2% after JPMorgan upgraded the sports betting stock to “Overweight” from “Neutral”, with the company’s recent underperformance creating an attractive entry point for investors.

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Quick Singles

🪃 Local News

• Jacinta Allen will become the next premier of Victoria after labour leader Daniel Andrews resigned yesterday.

• A report into PwC Australia’s behaviour blamed a "shadow" culture that allowed terrible behaviour in pursuing profit and "growth at all costs," with governance issues that were overlooked for years.

• Executives of Qatar Airways expressed surprise and shock after their application to increase services to Australia was rejected. They told a Senate inquiry that the Albanese government did not provide adequate reasons for blocking the flights.

🌏 Around The Globe

• OpenAI revealed yesterday that ChatGPT will be able to respond to your questions with spoken words, resulting in a two-way conversation. The voice feature is rolling out to ChatGPT Plus customers in the next two weeks and will be accessible to everyone else “soon after,” OpenAI said.

• Costco is moving into health care via a partnership with marketplace Sesame, where its members will have access to $29 primary care visits.

• ✈️ Pack Your Bags - North Korea is reopening its borders to foreign visitors for the first time since Kim Jong Un closed the country off at the beginning of the Covid pandemic.

• Credit rating agency Moody’s warned that a federal government shutdown would negatively impact the country’s credit.

• Nissan announced it will only sell Electric Vehicles in Europe by 2030.

• Workers from the largest nonprofit healthcare provider, Kaiser, say they’ll walk out in early October if a staffing crisis isn’t resolved by the end of the week.

• CIFI Holdings Group Co, a Chinese property developer, saw a 55% decline in its stock price after reporting a net loss of almost 9 billion yuan in the year's first half.

₿ Crypto Corner

• JPMorgan said its retail division, Chase, will prohibit its British customers from conducting cryptocurrency transactions. As of October 16, British customers can no longer use a Chase debit card or transfer funds from their Chase account to purchase digital assets on a cryptocurrency website.

• Ben Armstrong, a crypto influencer and former host of Bitboy Crypto on YouTube, was arrested while livestreaming outside the house of his former business partner, who he alleges has his Lamborghini.

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Markets

ASX200 Company Movers

Index & Commodity Prices

Bond Prices

ASX By Sector

ETF Watch

Newsletter Recommendation

ASX News

ASX Company Announcements

Endeavour (EDV) has recommended to its shareholders that they vote against the election of Bill Wavish as an independent non-executive director at its AGM, set to be held on October 31. The former Myer chair and Woolworths Executive has nominated himself for a seat on the board, saying Endeavour is poorly run.

Meteoric Resources (MEI) provided the market with a positive update on its initial results of metallurgical test work being undertaken on its 100%-owned Caldeira Rare Earth Ionic Clay Project. Meteoric shares rose 6.4%

Novonix (NVX) will receive up to CAD$3 million in research and development funding and advisory services from the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP).

Race Oncology (RAC) produced its first batch of bisantrene dihydrochloride under cGMP standards with its Indian-based partner Laurus Labs. Race shares finished the day 9.4% higher.

Star Entertainment Group (SGR) were one of the big fallers today, dropping by 16% after it finalised its capital raising of $565 million at a share price of $0.60. The take-up rate in the Institutional Entitlement Offer was approximately 67%. The AFR reported that Star’s largest shareholder, Bruce Mathieson, did not participate in the capital raise.

Tamboran Resources (TBM) rose 11.5% after the Beetaloo Basin gas explorer booked its first estimate of resources at its wholly-owned permit in the Northern Territory.

Post of The Day

Deep Dive

August Inflation Creeps Higher

The Consumer Price Index (CPI) for August was released by the Australian Bureau of Statistics (ABS). The report shows a 5.2% increase over the 12 months leading up to August 2023, which is higher than the previous month's record of 4.9%.

Several sectors played a significant role in the higher inflation figures for August.

• Housing: +6.6%

• Transport: +7.4%

• Food & Non-Alcoholic Beverages: +4.4%,

• Insurance & Financial Services: +8.8%

The headline CPI figure considers items like automotive fuel, fruit and vegetables, and holiday travel.

However, when these volatile components are excluded, the annual increase for August was 5.5%, which is slightly lower than July's 5.8%. T

Sector Breakdown

1. The housing sector's annual increase was primarily driven by new dwelling prices, which rose by 4.8%, marking the lowest annual rise since August 2021. This change is attributed to the easing of building material prices due to improved supply conditions. On the other hand, the rental market remains tight, with rent prices increasing by 7.8% from 12 months to August.

2. Electricity and Gas prices both saw significant hikes, with increases of 12.7% and 12.9% respectively over the past year. These rises are reflective of the surge in wholesale prices. However, the introduction of rebates from the Energy Bill Relief Fund in most cities in July has cushioned the blow for eligible households.

3. Automotive fuel prices have been particularly volatile, with a 13.9% rise from the previous year, thanks to higher oil prices.

4. Food and non-alcoholic beverages sector saw a 4.4% rise in the past year, a decrease from the 5.6% annual increase in July. Despite the overall easing of food inflation, certain categories like Bread, Cereal Products, and Dairy Products have seen over a 10% price increase in the past year. In contrast, Fruit and vegetable prices have dropped by 8.3% due to favourable growing conditions.

Daily Quiz

Test Your Knowledge

Yesterday’s Daily Quiz Question. Which of these was the first ever online dating site - launched in 1995

Answer: Match.com Well done to the 32% of you who got that correct. Yes, Match.com was founded in 1995. Owned by U.S. Match Group, match.com is one of many dating apps under the Match umbrella, which includes Tinder, OkCupid and Hinge. eHarmony is the next oldest dating site on this list, launching in 2000.

A Little Extra

📉 Going Down?

Top 10 shorted stocks on the ASX - as of September 21

1. Pilbara Minerals (PLS) - 11.76%

2. Flight Centre (FLT) - 9.46%

3. Genesis Minerals (GMD) - 9.44%

4. Syrah Resources (SYR) - 8.72%

5. IDP Education (IEL) - 8.71%

6. Core Lithium (CXO) - 8.71%

7. Elders Limited (ELD) - 8.26%

8. Sayona Mining (SYA) - 8.14%

9. Select Harvests (SHV) - 8.05%

10. Mesoblast (APX) - 7.33%

📊Broker Ratings

What do the brokers have to say?

1. ProMedicus (PME) - Rated as a Hold (Bell Potter). Target Price was lifted to $75.00.

2. Star Entertainment (SGR) - Rated as an Accumulate (Ord Minnett). Target price maintained at $1.20

👨‍💼 Director Transactions

What are the insiders doing? (On-market only)

💲Dividends

Companies trading ex-dividend today

📅 Economic Calendar

Data to keep an eye on this week

DISCLAIMER: None of the information provided in this newsletter should be constituted as financial advice. This newsletter is strictly for educational purposes only. It should not be taken as investment advice or a solicitation to buy or sell assets or make financial decisions. Please do your research.