ASX futures are pointing lower after some downside volatility reared its head on US markets overnight.

The S&P500 fell 1.4%, while tech stocks came under renewed pressure as the Nasdaq fell by 2.5%.

Although markets largely digested the December CPI print on Wednesday night, analysts attributed the selloff to lingering inflation fears — this time on the supply side.

US Producer Price Inflation (PPI) rose by 0.2% in December, slightly below expectations but enough to flow through to annual growth of 9.7% — the highest print since the measure was established in 2010.

Combined with annual CPI growth of more than 7% (the highest level since 1982), the prospect of tighter monetary policy this year is now firmly accepted by markets.

While consensus appears to be that annual inflation prints will fall once higher base effects from 2021 are factored in, this week’s data update was enough to spark another small round of volatility overnight as investors adjust to the post-COVID outlook.

The risk-off sentiment flowed through to crypto markets, as Bitcoin fell back below US$43,000 after making a run at US$44,000 in the previous section.

5 ASX small caps to watch today

SSR Mining (ASX:SSR)
The company said it’s struck a deal to sell its Pitarrilla silver, lead and zinc project in Durango, Mexico to the NYSE-listed Endeavour Silver Corp for a total consideration of up to US$127 million. The amount is comprised of US$35m cash, US$35m Endeavour shares and a 1.5% smelter royalty that SSR estimated at up to US$57m.

Michael Hill International (ASX:MHJ)
The jewellery group provided a half-year trading update, where it said group EBITDA is expected to fall within a range between $49m-$53m. CEO Daniel Bracken said strong execution over the Christmas period, and targeting marketing, digital sales and supply chain initiatives, had underpinned a strong trading period despite the retail store disruptions from the pandemic.

Castillo Copper (ASX:CCZ)
CCZ advised that its received a new geological report for the east zone of its Broken Hill Alliance project, which highlighted “significant exploration potential for cobalt-copper-zinc and possibly lithium mineralisation”. The company said it will now focus on developing the project and its pursuit of separate lithium assets.

Forrestania Resources (ASX:FRS)
FRS said it’s returned “strong results from its recent mapping trips to the Forrestania region”. Rock chip data confirmed a strike length of 1.6km of strong surface gold at its Black Prince project, while the company also uncovered “high grade lithium rock chips returned from the Gemcutter prospect”, FRS said.

Peako Ltd (ASX:PKO)
The company reported results from the ‘scout’ RC drill program at its East Kimberley project last September. A total of 30 holes for 1,249m was completed. PKO said the program uncovered mineralisation of gold, silver, lead and copper. The intercept extends the strike of mineralisation previously intersected in historical drilling by a further 80m, to approximately 300m which remains open to the north-east, PKO said.