Market Highlights: All eyes on another ASX record, and why investors could pile on stocks before year-end

ASX could hit record despite mixed bag on Wall Street
US stocks expected to outperform bonds as Fed cuts rates
Bristol Myers Squibb rises after FDA approves schizophrenia drug

The ASX could hit another record high on the last day of September despite a mixed bag on Wall Street. At 8am AEST, the SPI ASX200 futures contract was pointing up by 0.3%

On Friday, the S&P 500 fell by 0.13%, the blue chips Dow Jones index rose by 0.33% – a new record, and the tech heavy Nasdaq slipped by 0.39%.

Investors were pleased with the August reading of the Personal Consumption Expenditures (PCE) index, the inflation measure favoured by the US Fed.

The PCE indicated that price pressures are continuing to cool, rising just 0.1% month over month and coming in below Wall Street’s forecasts.

“I think Fed officials are feeling pretty good about where inflation is sitting,” said PIMCO’s Tiffany Wilding.

Elsewhere, oil-related stocks could be under the microscope today after Israel took out Hezbollah’s leader with a major airstrike in Beirut over the weekend. Brent crude traded 0.5% higher on Friday before the incident happened.

Nvidia fell 2% on no specific news. The company, however, had some headwinds lately as Super Micro Computer, one of its major customers and an AI server manufacturer, found itself in a pickle following news of a DOJ investigation into possible accounting violations.

Intel fell slightly despite Financial Times reporting that the chipmaker is close to securing US$8.5 billion in funding from the CHIPS Act by the end of the year. In a separate development, Bloomberg reported that Arm Holdings has shown interest in buying out Intel’s product business.

Biotech company Cassava Sciences dropped over 10% following a settlement with the US SEC. The SEC had alleged that the company made misleading claims regarding an Alzheimer’s clinical trial, and the settlement amounts to over over US$40 million.

Bristol Myers Squibb climbed 1.5% after the FDA approved its schizophrenia drug. This marks the first new treatment option for patients with the disease in 30 years.

And closer to home today, eyes will be on Australia’s private sector credit data, while China will drop its purchasing managers’ indexes.

Investors to pile on to US stocks

US stocks are set to outperform government and corporate bonds for the rest of the year, thanks to ongoing interest rate cuts from the Federal Reserve.

According to the latest Bloomberg Markets Live Pulse survey, 60% of the 499 respondents believe US equities will deliver the best returns in the fourth quarter.

As investors ramp up their bets on these stocks, they’re steering clear of traditional safe havens like Treasuries, the dollar, and gold.

This optimistic sentiment aligns with a bullish outlook emerging on Wall Street following the Fed’s recent half-point rate cut.

The Fed cut its benchmark rate from a two-decade high on September 18, and projections suggest an additional half-point cut may come during the remaining meetings in November and December.

The recent stock rally in China, the biggest since 2008 due to big economic stimulus from Xi Jinping’s government, has also contributed to the the upbeat sentiment.

“We’d already been leaning into risk assets and leaning into US equity,” said Yung-Yu Ma at BMO Wealth Management, adding that “if there were a pullback, we would consider even adding to that.”

In other markets …

Gold price fell by 0.5% to US$2,658.40 an ounce.

Oil prices rose by 0.5%, with Brent crude now trading at US$71.98 a barrel.

The benchmark 10-year US Treasury yield tumbled by 5 basis point (bond prices higher) to 3.75%.

Bitcoin traded flattish in the last 24 hours at US$65,776, while Ethereum fell by 0.5% to US$2,665.

Meanwhile, iron ore climbed another by 0.5% to $US103 a tonne after rising by 4% on Friday.

5 ASX small caps to watch today

EBR Systems (ASX:EBR)
The FDA has begun a detailed review of EBR Systems’ Pre-Market Approval (PMA) application for the WiSE CRT System. It has confirmed that the application contains all necessary information to proceed. EBR expects regulatory approval by the first quarter of 2025, with a market launch later in the year. This announcement comes shortly after EBR secured $50 million in financing, which will support its operations until FDA approval and help with early commercialisation. Separately, the Breakthrough Device designation for WiSE enables EBR to receive prioritised review and interactive communication with the FDA.

Marmota (ASX:MEU)
Marmota announced that its first reverse circulation (RC) drilling at Goolagong, located on EL 5818, has found significant gold in 11 out of 15 holes, with grades reaching up to 4.4 g/t over 1 metre. This confirms Goolagong as a new gold discovery in South Australia, and the extent of the discovery is still unknown. Goolagong is situated 20km northwest of the Challenger Gold mine, which has produced over 1 million ounces of gold. The initial drilling was part of Project X and focused on a gold-in-calcrete anomaly that had never been drilled before.

RemSense Technologies (ASX:REM)
RemSense has been awarded its second contract under a global Services Agreement with Chevron. This new partnership extends into the USA, where RemSense will provide high-resolution photogrammetry scanning and image processing services for an offshore production facility. The contract is valued at approximately US$66,790 and is expected to be completed by the end of November. While the contract amount is not substantial, the expansion of RemSense’s collaboration with Chevron in the Americas is significant for investors, the company says, as it highlights a key development in RemSense’s global strategy.

Warriedar Resources (ASX:WA8)
Warriedar has announced strong results from its diamond drilling program at Ricciardo, which included 27 holes and a total of 2,701 metres. Drilling beneath the Silverstone pit confirmed that a high-grade gold shoot continues at greater depths, with notable results including 13.7 metres at 3.27 g/t Au and 22.6 metres at 2.11 g/t Au. Drilling in the Eastern Creek area also showed increasing grades and widths. An updated Mineral Resource Estimate for Ricciardo is expected in Q4 2024, and an aircore drilling program is currently underway at the Golden Range Project, with further drilling planned for November.

Alchemy Resources (ASX:ALY)
Alchemy has signed a Farm-in and Joint Venture agreement with the Japan Organization for Metals and Energy Security (JOGMEC). This joint venture covers 248 km² of the Roe Hills area within Alchemy’s Karonie Lithium and Gold Project in Western Australia, which is considered promising for lithium discovery similar to the nearby Manna deposit. JOGMEC can earn a 51% interest by investing $6 million by 31 March 2029, with a minimum of $600,000 to be spent by 31 March 2025. Alchemy will manage exploration during this period, and the agreement is subject to approval from the Australian Foreign Investment Review Board.