Market Highlights and 5 ASX Small Caps to watch on Friday

The ASX 200 is set to open higher this morning after a rally on Wall Street
OPEC has decided to raise oil output
Expert believes the RBA won’t stop hiking rates until the cash rate is at 1.5%

Aussie shares are set to rise this morning, following a sharp session on Wall Street overnight.

At 8am AEST, the ASX 200 June futures index is pointing up by 1.07%.

US stocks were higher across the board as all three major stockmarket indices rose sharply – the Dow by 1.33%, the S&P 500 by 1.84%, and Nasdaq by 2.69%.

Big Tech stocks like Apple, Amazon, Tesla all jumped higher by 2%-4%, as the VIX index (which measures market volatility) retreats.

But the US and Australian market will face a crucible test next week, as both the Fed and RBA have scheduled board meetings.

Around 125 of the world’s central banks have now tightened monetary policy, producing conditions that are the most restrictive since the GFC crisis of 2008.

Current local market pricing is projecting the most aggressive tightening cycle since 1990 – significantly higher than the last four rate hike cycles.

Andrew Canobi, director, Franklin Templeton Fixed Income, is sticking with his view that the RBA should take a measured approach to raising the cash rate.

He believes that the RBA will likely end up with a high for the cycle of around 1.5%.

“It could be slightly higher, but it is almost certainly not going to the level currently priced by the market,” Canobi said.

Meanwhile, OPEC+ states agreed overnight to raise oil output by 650,000 barrels per day (bpd) in the next two months, rather than the current 432,000 bpd.

But the good news was overshadowed by data showing that US crude inventories fell more than expected last week, amid high demand for fuel.

Brent crude rose by 1.5% to US$118 a barrel.

President Biden told reporters at a White House briefing: “There’s a lot going on right now, but the idea we’re going to be able to click a switch, bring down the cost of gasoline, is not likely in the near term, nor is it with regard to food.”

5 ASX small caps to watch today

Australian Silica Quartz (ASX:ASQ)
ASQ says it has discovered highly anomalous nickel values from the first aircore drilling at ASQ’s 100% owned South Stirling Project in WA. Results include: 12m from 26m @ 0.70% Ni and 0.06% Cu.

Encounter Resources (ASX:ENR)
Additional surface sampling and field reconnaissance completed at Sandover in April confirmed further areas of surface copper oxide mineralisation. Encounter has also been awarded a $100k grant by the Northern Territory Geological Survey to complete a gravity survey at Sandover, which is scheduled to commence in the coming weeks.

Black Cat Syndicate (ASX:BC8)
Black Cat has completed a Preliminary Feasibility Study (PFS) of the Kal East Gold Project in WA. The study demonstrates a robust, base case, production plan for Kal East: total production of 301.7koz @ 1.9g/t Au including initial ore reserves of 242.9koz @ 2.0g/t Au (A$2,300/oz gold price).

Peoplein Ltd (ASX:PPE)
The recruitment company will acquire shares in Food Industry People, a leading workforce solutions business. PPE will pay an upfront consideration of $45m ($35m cash and $10m PPE shares). A further $25m may be payable as deferred cash consideration over two tranches based on the business achieving agreed growth in EBITDA for FY23 and FY24.

Mt Monger Resources (ASX:MTM)
MTM says three key tenement applications were granted, significantly expanding its Ravensthorpe project area. The company now holds a total of 11 granted exploration licences in Ravensthorpe, which collectively cover approximately 1,400km.