• The ASX is set to open much lower on Monday
  • Wall Street plunged on Friday as earnings season starts
  • RBA meeting minutes to be released this week

Local shares are set to reverse Friday’s gains and dive lower today. At 8am AEST, the ASX 200 October futures contract was pointing down by 1.5%.

On Friday, Wall St fell sharply as investors digested the latest corporate earnings and updates on inflation expectations.

The Dow Jones lost 1.3%, the S&P 500 -2.4%, and Nasdaq by -3.1%.

The kickoff to earnings season has started as investment banking revenue came in higher than -expected.

JP Morgan rose 2% as it topped estimates and delivered more revenue (US$33.49 billion) than expected (US$32.1 billion). Wells Fargo shares also rallied 2% after strong beats with both net interest income and revenue.

Delta Airlines’ earnings were solid (US$695m profit) as the carrier signalled confidence in travel demand for the rest of the year.

Despite the good start, analysts at big investment banks have slashed their expectations for Q3 earnings of big US big companies by a total of US$34 billion this season.

Charles Lemonides, chief investment officer at Valueworks, however, believes there are many stocks trading at attractive prices right now.

“A lot of securities are attractively priced,” Lemonides told the FT. “I think there will be differentiation between winners and losers… but when you look at the overall market, the Fed is still the be all and end all.”

The Fed Reserve Bank of New York released the September 2022 Survey of Consumer Expectations, which shows that inflation expectations continued to decline in the short term, but increased slightly in the medium and longer terms.

Despite the encouraging news, oil prices plunged 4% as traders weigh recession fears while gold also dropped 1.5% to US$1,643 an ounce.

Iron ore was up 2% to $US96.15 a tonne, and Bitcoin is trading steady at US$19,150.

Over in the UK, British PM Liz Truss threw her finance minister and long time political friend, Kwasi Kwarteng, under the bus after just 39 days on the job, making him the second-shortest-serving UK chancellor (that honour goes to Iain Macleod, who served in office for 30 days before passing away in 1970).

Investors have sold British government bonds heavily since Sept 23 when Kwarteng unveiled a budget that contained unfunded tax cuts, which raised concerns about the government’s financial position. The Bank of England had to step in with an emergency bond-buying program to prevent a financial calamity.

In other news, the Fed is investigating trades made by Atlanta Fed President Raphael Bostic during restricted periods.

And Trevor Milton, the founder and former CEO of electric automaker Nikola, was found guilty of fraud for lying to investors to pump up the stock.

A key focus of his deception was that Nikola staged the first video of its hydrogen truck driving by simply rolling it down a hill.

Looking ahead to the ASX session this week, ASX listed Stockland, Brambles, Treasury Wine Estate, Magellan Financial and Perpetual will provide updates at their AGMs.

And on Tuesday, the RBA board meeting minutes for October 4 will be released, while RBA Deputy Governor Bullock will give a speech.

5 ASX small caps to watch today

Swift Networks (ASX:SW1)
Swift has secured a new three-year agreement with Mineral Resources  (ASX:MIN) to service their nine mine sites with Swift Access. It’s a $3.4 million subscription contract value, with revenues expected to commence in H1 of FY23.

Delta Drone (ASX:DLT)
Delta Drone via its subsidiary Rocketmine signed a contract to formalise its drone surveying services to Rustenburg Platinum Mines, a mine in South Africa which is wholly owned by Anglo American. It’s a two-year contract (remaining) with a Total Contract Value (TCV) of $516k and Annual Recurring Revenue of $258k.

Patrys (ASX:PAB)
Patrys announced new preclinical data for its full-sized IgG antibody, PAT-DX3. Results from a new study support the potential to use deoxymabs to deliver small molecule therapeutics and gene editing technologies across the blood-brain barrier to treat various neurological targets and conditions.

Tower (ASX:TWR)
The Kiwi insurer has updated its earnings guidance for the year to 30 September. Based on preliminary results, Tower anticipates underlying NPAT (including large events) will be around $26m, up from a range of $21m-$25m. Underlying NPAT (excluding large events ) is expected to be around $40m, above the previously advised range of $35.4m to $39.4m.

Catalano Seafood (ASX:CSF)
Catalano has signed a deal with Coles (ASX:COL) to supply to ‘Coles Local’ store in South Perth, with anticipated expansion to further locations in the Perth metropolitan area. Coles Local is a subsidiary of Coles Supermarkets in Australia, founded in 2018 as a way of expanding into the popular small format store market. It has since expanded to 15 sites in Victoria, NSW and Qld.