US stocks edged higher overnight, as markets maintain a controlled exhale from fears of an inflation spike.

While rising prices can be a reflection of economic strength, stock investors really only have to worry about one thing; whether inflation rises fast enough that central banks have to tighten policy faster than everyone expected.

Since the spike in US inflation data earlier this month, members of the US Fed have so far controlled the narrative that the liquidity taps won’t have be turned off too quickly.

If the taps do have to get turned off, it means we may be running out of opportunities to use this gif. So, better safe than sorry:

Inflation would come as a rude shock to most investors because it hasn’t been a problem since the late 1970s — at which point the US Fed hiked rates aggressively to get it under control.

In comments overnight, US Fed committee member Randal Quarles said the Fed may have to start flagging a taper of its asset purchase program later this year.

But while he expects inflation to rise, he doesn’t think it will get out of hand.

“I am not worried about a return to the 1970s,” Quarles said.

On local markets, the ASX200 is drifting sideways but it’s been an ugly start at the small end of town as the microcap Emerging Markets index fell by more than one per cent.
 

WINNERS

Here are the best performing ASX small cap stocks at 12pm Thursday, May 27:

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

It was a busy morning on the winner’s list, where of the 22 ASX small caps with gains of 15 per cent or more, 14 had market-moving announcements.

Swoop Holdings (ASX:SWP) has caught the market’s eye as the latest telco play to debut on the ASX.

After raising $20m from investors in a pre-IPO round, SWP shares climbed to $1.14 in morning trade for a day-one gain of 148%.

Ahead of the listing, Stockhead’s Nick Sundich spoke with Swoop chairman, tech luminary James Spenceley, about his involvement with the company.

Among resources winners, leading the pack was lithium play Sayona Mining (ASX:SYA) which got some good regulatory news in connection with a pending acquisition in Quebec.

The company announced that a court-appointed administrator has indicated it will approve a bid by Sayona and Piedmont Lithium (ASX:PLL) to acquire North American Lithium Inc (NALs), after also getting the go-ahead from NAL’s creditors.

Rounding out the top three was MetalsTech (ASX:MTC), which raced higher on news it would be selling some lithium assets.

The company announced a binding agreement to sell royalty interests in its lithium assets to North America-based Lithium Royalty Corp in an $18m cash and share deal.

MTC said it will use the funds to accelerate the expansion of its Sturec gold mine in Slovakia.
 

LOSERS

Here are the worst performing ASX small cap stocks at 12pm Thursday, May 27:

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