Market highlights and 5 ASX small caps to watch on Friday

US and European stock markets fell heavily overnight
Britain and Switzerland raised their rates, stoking fears of a global recession
The ASX 200 is set to open lower today

US and European equities were crushed overnight, as rate increases around the world stoked worries of a global recession.

On Wall Street, the S&P 500 fell by 3% while tech heavy Nasdaq plunged by another 4%. It was the sixth day out of seven that US stocks have been sold off.

Tech stocks like Tesla were down 8.5%, and Apple by 4%.

The story was similar in Europe where the FTSE-100 and CAC-40 fell by 2-3%. The French CAC index is now in bear territory after falling 20% from its most recent high.

Both the Bank of England and the Swiss National Bank hiked their rates overnight – by 25bp and 50bp respectively – following the US Fed’s 75bp hike on Wednesday.

“That is what people are reassessing today – what is the probability of a potential recession and will corporate profits come in where analysts estimates are or will those get taken down?” Tom Hainlin of Ascent Private Wealth Group told FT.

US economic data is already showing a deceleration in activity, which is making Wall Street bring forward its recession calls, says Oanda market analyst Edward Moya.

“Traders went from expecting a soft landing to fearing an imminent recession. Some consumers are already behaving as if we are already in a recession, and that is a troubling sign for many of the S&P 500 companies,” Moya said.

Meanwhile, President Biden told AP reporters at the White House that a recession is not inevitable.

“First of all, it’s not inevitable,” he said. “Secondly, we’re in a stronger position than any nation in the world to overcome this inflation.”

“The need for mental health in America, it has skyrocketed, because people have seen everything upset. Everything they’ve counted on upset. But most of it is what happened as a consequence of the COVID crisis,” Biden said.

Back home, local shares are set to open lower this morning, with the ASX 200 June futures pointing down by 1% at 8.30am AEST.

5 ASX small caps to watch today

TerraCom (ASX:TER)
The coal miner says an offtake deal has been reached for the delivery of up to 1.25 million tonnes to a long-term Japanese trading partner over 13 months from its Blair Athol operation. The terms include one cargo per month, with each cargo delivering between 67,000 and 88,000 tonnes.

Bubs Australia (ASX:BUB)
Bubs announced a material upgrade to the company’s FY22 revenue and earnings expectations. Following recent contract wins in the US, the company now expects FY22 gross revenue to exceed $100m, and to achieve at least 100% increase on 1H22 underlying EBITDA of $1.2m.

EV Resources (ASX:EVR)
EVR has approved Austrian geological consultants, GEO Unterweissacher, to carry out the exploration strategy for the company’s satellite Eastern Alps Lithium Project in Austria. The project is owned 80% by EVR and 20% by European Lithium (ASX:EUR).

Thor Mining (ASX:THR)
A high-powered Fixed Loop Electromagnetics (FLEM) ground geophysics survey has identified a shallow conductor beneath the nickel gossan at the Krona Prospect of Thor’s 100% owned Ragged Range Project in WA. Thor says the conductor is consistent with sulphides, and warrants drill testing to validate.

CuFe (ASX:CUF)
Drilling program has commenced at Orlando Project in Tennant Creek. The program is a combination of RC (resource infill, step-out targets, water monitoring) and Diamond (core  for metallurgical and geotechnical testwork).

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