Good Evening,

Welcome to Equity Espresso. We’re here to catch you up on the day’s important stock market news in Australia and abroad. Here’s a sample of what you may have missed:

1. 🛢️ Oil's 5% Plunge

2. 💂‍♂️ PEXA's U.K. Expansion

3. 📖 Spotify’s Aussie Gift

4. 🏗️ Another Builder Busts

5. 🚗 Record-Breaking Vehicle Deliveries

The Recap

ASX Bounces Back As
Oil Prices Plunge

Our market saw a refreshing sight of green following a positive lead from Wall Street overnight. The ASX200 index traded lower in the morning, but a productive afternoon session saw it finish 35 points or 0.51% higher at 6,925.5.

Eight of the 11 sectors on our index finished in the green. Real Estate (+2.1%), Tech (+1.7%) and Telco (+1.4%) led the way.

Oil prices were the big story overnight after plunging by more than 5%, with Crude West Texas Intermediate trading below US$85 a barrel.
Data from the Energy Information Administration (EIA) showed that gasoline demand was falling, which sparked the largest one-day sell-off in over a year.

The sharp fall in the oil price was a drag for our Energy sector, which finished 0.89% lower.

Don’t go filling your cars up just yet, though. Economist Stephen Koukoulas says the fall in oil prices will take 10-15 days to be reflected in local petrol prices. Check out his tweet post later in the newsletter.

Outlook

U.S. pre-market futures are trading lower, with the S&P 500 and NASDAQ down 0.05%. Initial Jobless Claims and Trade Balance data will be reported overnight.

Locally, Aussie Retail Sales will be reported tomorrow.

Economic Data

• Australia's trade surplus increased to $9.64 billion in August from a downwardly revised $7.32 billion in July and above market forecasts of $8.72 billion. Exports grew by 4% from July to reach a three-month high of $55.69 billion, while imports fell.

• Private businesses in the U.S. hired 89,000 workers in September, the least since January 2021 when private employers shed jobs, which was well below market forecasts of 153,000. This followed a revised-up 180,000 increase in August, compared to an initial figure of 177,000.

• The ISM Services PMI eased to 53.6 in September of 2023 from the six-month high of 54.5 in August, in line with market expectations, marking the ninth consecutive expansion in the sector.

Wall Street

Wall Street broke out of its funk on Wednesday as U.S. stocks traded higher, led by the NASDAQ (+1.35%), as a weaker-than-expected Employment change helped drive markets higher. The S&P 500 (+0.81%) was also higher, with Discretionary stocks rising the most, followed by Communication Services. Treasury yields eased, with the 10-year trading at 4.73%.

Tesla (+5.7%) was the big mover on the NASDAQ, followed by Amazon (+1.7%) and Alphabet (+2.0%).

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Quick Singles

🪃 Local News

• Another builder has gone bust. Victorian residential builder River Dale Building Group, which trades as Chatham Homes, has entered liquidation and will stop work on all of its current 50 residential home projects in Victoria. It joins the list of Kleev Homes, Porter Davis, Probuild and A1A Homes as builders to have collapsed in 2023.

• The Albanese Government is aiming to strengthen the integrity of the international education sector to better protect students. The tightening comes after an independent report found flaws in the system that allowed criminal exploitation of international students.

• According to a Domain rent report, Australia needs an additional 70,000 rental properties to improve the balance in the market as rental prices continue to spike.

• Australian new vehicle deliveries set a record in September. Industry-supplied VFACTS data for September 2023 recorded 110,702 new vehicle sales - up 18.3% from last year.

🌏 Around The Globe

• Pay Boost - Chicago is set to eliminate subminimum wages for tipped employees. If legislated, restaurants would be required to boost pay from around $9/hr to a minimum of $15.80/hr for tipped workers.

• More than 75,000 Kaiser workers plan to go on strike in the next three days over staffing shortages and a pay dispute. Kaiser is a not-for-profit healthcare provider.

• Chipotle is collaborating with restaurant automation startup Hyphen to test robots in their kitchen whipping up burrito bowels.

• Intel will IPO its Programmable Solutions Group business in two to three years.

• Spotify is giving paid premium subscribers in the U.K. and Australia 15 hours of free audiobook listening per month. It will launch in the U.S. later in the year.

• WeWork shares fell after the company said it won’t make interest payments totalling $95million. The company will enter a 30-day grace period in hopes of jumpstarting negotiations with lenders.

• Walmart chief executive John Furner said in an interview that the company has seen “a slight change” in food purchasing habits of people taking Ozempic and other weight loss drugs compared to people who aren’t. The company is seeing “a slight pullback in the overall basket” when looking at the consumer data.

₿ Crypto Corner

• Day one of the "Crypto Trial of the Century" began with the criminal case against Sam Bankman-Fried (SBF). The Department of Justice (DOJ) took a tough stance against SBF in its first statement, portraying the FTX founder as someone who deliberately lied to investors to enrich himself and expand his crypto empire. The DOJ claimed that SBF lied to FTX customers and investors, using Alameda as a critical partner to “steal customers' funds,” a phrase that was frequently used during the opening statements.

• Binance has been hit with a class-action lawsuit for allegedly manipulating the market to monopolise the crypto industry and cause harm to FTX.

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Markets

ASX200 Company Movers

Index & Commodity Prices

Sector

Bond Prices

ETF Watch

ASX News

ASX Company Announcements

Insurance Australia Group (IAG) appointed William McDonnell as their new CFO, effective December 11, subject to regulatory approval. Current CFO Michelle McPherson announced her retirement in May this year but will remain with the company until the end of the calendar year.

Kelly Partners (KPG) says it’s continuing to conduct a strategic review and has identified the potential opportunity of a U.S. listing to help support its overseas growth ambitions.

Newcrest Mining (NCM) shareholders got a surprise, with the gold miner announcing a special fully franked dividend of US$1.10 per share. The ex-dividened date will be October 18, with the payment date on October 27.

Property Exchange Australia (PXA) fell after announcing a planned acquisition of U.K.-based conveyancing technology provider Smoove for £31 million ($59 million). Smoove shareholders will be entitled to receive 54 pence in cash for each share in the capital of Smoove they hold. The acquisition will give PEXA access to over 75 conveyancer firms through Smoove’s conveyancer platform.

Westgold Resources (WGX) rose after providing an update on its Q1 production results. Westgold produced 63,104 ounces of gold from its Murchison and Byrah Operations in WA. The average gold sale price was $2,888/oz. Westgold also reaffirmed its FY24 production guidance of 245,000 – 265,000 ounces. The full quarterly report will be released on October 25.

Post of The Day

Deep Dive

September Recap

A look at 5 poor performers on the ASX last month

1. Pointsbet (PBH), -51%. Pointsbet's share price fell following the sale completion of its U.S.-based business to fellow online gambling company Fanatics. Pointsbet received US$175 million due to the sale, which, in turn, paid back to shareholders at $1.00 per share on September 22.

2. Botanix Pharmaceuticals (BOT), -37%. Botanix shares fell towards the end of the month after receiving an update from the U.S. Food & Drug Administration. The update was related to Botanix’s Sofprionium Bromide gel for treating primary axillary hyperhidrosis (excessive sweating). Botanix said that the key area to be addressed by the FDA is the patient instructions, comprising the printed Instructions for Use document (inserted into the product carton) and wording on the product carton.

3. Chalice Mining (CHN), -35%. No new pertinent news drove the share price lower for Chalice during September; however, a scoping study released on August 29 was the likely driving factor in the continued fall in share price. Chalice shares lost 25% in one day after the study was issued, which outlined lower production and higher cost estimates at its Gonneville Nickel-Copper project.

4. Star Entertainment (SGR), -34%. A regular feature in a bottom-5 list. Star Entertainment is down 76.4% in the last year alone and 86.4% in 5-years. Yikes! The casino operator has faced fines for failing to stop money laundering and had their operating licence suspended. Star raised $750 million via an equity raise late in the month, which was a 20% discount to the company’s closing price before announcing the raise.

5. Tietto Minerals (TIE), -31%. The gold explorer saw a sharp fall during the month after providing a downgrade in guidance in H2 2023 to between 75,000 to 85,000/oz, reflecting grade control drilling results received during July and August and a lack of stockpiles.

Daily Quiz

Test Your Knowledge

Yesterday’s Daily Quiz Question. Which of these Large Caps fell the most during September?

Answer: CSL, which fell by 8.31% during September, followed closely by Goodman Group, which dropped by 8.18%. Westpac (-3.64%) and Woodside Energy (-1.43%) fared slightly better. CSL (38%) and Goodman Group (27%) were the two most popular answers in the poll

A Little Extra

📉 Going Down?

Top-10 shorted stocks on the ASX - as of September 29

1. Pilbara Minerals (PLS) - 11.70%

2. Genesis Minerals (GMD) - 9.89%

3. Flight Centre (FLT) - 9.44%

4. IDP Education (IEL) - 8.88%

5. Syrah Resources (SYR) - 8.85%

6. Core Lithium (CXO) - 8.70%

7. Sayona Mining (SYA) - 8.35%

8. Liontown Resources (LTR) - 7.83%

9. Select Harvests (SHV) - 7.82%

10. Appen (APX) - 7.69%

📊Broker Ratings

What do the brokers have to say?

1. Allkem (AKE) - Rated as an Add. (Morgans) Target price $15.30

2. Pilbara Minerals (PLS) - Rated as an Add (Morgans) Target price $5.60

3. Pilbara Minerals (PLS) - Rated as Neutral (UBS). Target price $4.15

You can read the broker commentary for Allkem and Pilbara here

👨‍💼 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.