Today’s News

The Big Picture

• Conflict escalates in the Middle East. Nine Iranian ships have been sunk and hundreds of thousands of air travelers are stranded in the Middle East as the US-Israeli war against Iran enters its third day. Iran has closed the Strait of Hormuz to ships, causing insurance firms to cancel transiting ships’ policies and increase rates by up to 50%. (Sky News | FT)
  
  

• Oil price spikes despite increased OPEC production. Brent oil, the international oil price benchmark, spiked 13% on fears of a disruption to oil supplies. Eight OPEC countries announced they would increase oil production by 206,000 barrels a day by April to help relieve supply concerns. (BI | NYT)
  
  

• Gold miners rise as investors flee to safety. The spot price of gold rose over 6% to US$5,360 per ounce as the Iran conflict sends investors fleeing to safety. Australian gold miners also benefited; Newmont rose 6%, Northern Star rose 4%, and Evolution Mining rose 6%. (Gold Price)
  
  

• Australian dividend bonanza. As we get towards the end of Reporting Season, Plato Investment Management have done the maths. ASX 200 companies declared dividends worth more than $35 billion overall, with total dividends up 6.9% year on year. Plato said 61% of companies increased dividends, 13% declared a flat dividend and 27% reduced payouts. (Capital Brief)
  
  

• UK private credit collapse rocks US banks. Market Financial Solutions, a UK company financed by private credit, went bankrupt amid allegations of dodgy loans. This sparked the largest US bank stock sell-off since Trump’s ‘Liberation Day’ due to banks’ heavy exposure to private credit. Big banks like Morgan Stanley, Goldman Sachs, and Jefferies fell 6%, 8%, and 9%, respectively. (AFR)

Companies in the news

• OpenAI inks Pentagon deal after Anthropic denial. OpenAI announced a new deal with the US Department of Defence hours after Anthropic blocked the Pentagon from using its AI models for autonomous weapons or domestic surveillance purposes. OpenAI CEO Sam Altman insisted his firm would not provide AI capabilities for either of those use cases. (NYT)
  
  

• Aussie AI firms land $660m-per-year Nvidia deal. Firmus Technologies and CDC Data Centres have committed to deploy 18,400 Nvidia chips in a $70 billion Melbourne project on behalf of a tech giant believed to be Meta. (AFR)
  
  

• Australian defence, oil stocks rise on Iran concerns. Fears of escalating armed conflict and oil supply disruption boosted share prices of DroneShield (up 12%), Karoon Energy (up 13%), Beach Energy (up 7%), and other related ASX-listed companies yesterday. (AFR)
  
  

• Troubled loans hit KKR. The $760 billion investment giant KKR is the latest victim of the shaky private credit market as one of its credit funds announced a markdown of its portfolio’s assets and a slashed dividend. (FT)
  
  

• Magellan to merge with Barrenjoey. The deal will value the Australian investment bank at $1.6 billion. Magellan already owned a third of Barrenjoey and the merger comes as Magellan revealed Barrenjoey’s net profit had doubled in the past year. (AFR)
  
  

• ING halts super sign-ups on suspicious activities. Suspicious volumes of online applications led the bank to take the sign-up website offline. This comes as APRA is heavily scrutinizing super funds’ cybersecurity following last year’s cyberattack on six major super funds. (AFR)

What the…?

There are lots of ways to lose millions of dollars, but a fluke accident in a horse paddock has got to be one of the most unlucky. The son of legendary Australian racehorse Winx was expected to be auctioned off for a record amount at the end of the month, but a self-inflicted accident has seen the colt pulled from the auction.

Winx holds a record of 33 straight race wins and earned more than $26 million in prize money in her career, and the colt’s half-sister sold for a record $10 million in 2024. The colt is expected to recover, but injury concerns will certainly hurt his value at auction, whenever that may be. (ABC)

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Today’s Insight

Short-term pain doesn’t define long-term results

We covered our portfolios in Monday’s episode, and admittedly Ren’s portfolio has had a tough patch. Down 4% this month and 11% in the past 12 months, it would be easy to become a bit dejected. But instead of stopping there, Ren zooms out.

Going back to his very first trade in March 2015, his long-term return is 16% per year, a strong return versus the ASX 200’s 12% per year over the same timeframe. That shift in time horizon completely changes the narrative. This rough 12 months will become one small hiccup in Ren’s investing story, which has decades left to unfold.

He reinforces the same idea at the stock level. Axon is down 19% over the past year, but zoom out to two years and it’s still up 40%. The message is simple and directly stated: context matters.

Monthly updates are useful. Annual comparisons are uncomfortable, but investing outcomes are ultimately decided over decades. And if you only ever look at the last 30 days, you risk misunderstanding the real trajectory of your portfolio. (Spotify | Apple | YouTube)

Today in Equity Mates