Are current inflationary forces transitory or entrenched?

The US Fed is starting to admit it may be the latter.

A complacent market was shocked overnight when the US Federal Reserve said it was likely to raise interest rates by 2023 — a year sooner than expected.

While moves by the Fed to taper monetary stimulus would be generally bad for stocks, raising rates just isn’t that easy anymore.

“Financial markets have, for much of the past decade operated on the basis of ‘QE Infinity’, or a conviction that the Fed would continue to pump liquidity into the system and maintain an ultra-low rate structure almost in perpetuity,” says SMH business columnist Stephen Bartholomeusz.

“At even a hint that the Fed would start to taper its purchases in the past, dramatic ‘taper tantrums’ by investors and traders have forced it to retreat.”

Remember this?

“If the Fed is to start normalising US monetary policy, reducing its purchases and lifting rates, it will be a delicate and potentially combustible process,” Bartholomeusz says.

The gold futures price was smashed overnight, falling by US$86.60/oz to US$1,774.80/oz. Iron ore gained 3.3% to US$220.8/t.

LME base metal prices were also down 3.8% on Thursday in response to “plans by China to release industrial metals from its national reserves to curb surging commodity prices”, Reuter says.
 

WINNERS

Here are the best performing ASX small cap stocks at 12pm Friday, June 18:

Swipe or scroll to reveal the full table. Click headings to sort.

Bubs (ASX:BUB) was one of the ASX’s biggest winners after entering the US$5.1 billion ($6.75 billion) per annum US infant formula market.

Explorer Wildcat Resources (ASX:WC8) has appointed an experienced mining leader as chairman to advance the ‘Mt Adrah’ and ‘Bolt Cutter’ gold projects.

Investment company Arowana (ASX:AWN), which has an electric vehicles subsidiary VivoPower, announced VivoPower signed an agreement to distribute electric light vehicles in Canada.
 

LOSERS

Here are the worst performing ASX small cap stocks at 12pm Friday, June 18:

Swipe or scroll to reveal the full table. Click headings to sort.