Market highlights and 5 ASX small caps to watch on Friday

The ASX 200 is set to open higher on Friday
The US GDP has contracted by 0.9% in Q2, putting the US economy in a technical recession
Apple’s quarterly earnings shine, while Amazon reports two consecutive quarters of losses

Local shares are set to open higher today. At 8am AEDT, the ASX 200 August futures is pointing up by 0.80%.

Overnight Wall Street pushed ahead to a two-month high with all major US indices rising by 1% despite a negative Q2 GDP reading.

The US economy contracted for a second straight quarter, this time by 0.90%. In Q1, it fell by 1.6%.

Technically, a recession happens where there are two straight quarters of GDP declines.

Message is clear from the negative US GDP print (-0.9%) and unfavorable miss on jobless claims:
The US #economy is slowing at a significant rate.
Add to that the 8.7% price change in today's data and the bottom line is clear:
Deepening stagflation and flashing red #recession risk

— Mohamed A. El-Erian (@elerianm) July 28, 2022

President Biden assured the market yesterday that the US economy is not in a recession following the Fed’s hike of 75bp.

Some experts also believe that appetite for risk is back amongst investors.

Nigel Green of deVere Group says the riskier part of the ecosystem, i.e. small caps, are performing.

“Typically, markets get into a tailspin over interest rate hikes, especially the size of the Fed’s latest 75 bps. But investors have seemingly shrugged this off, maybe because it was largely priced-in, maybe because the Fed Chair suggested rate rises may now slow,” Green said.

“Interestingly, it has been the riskier parts of the stock market universe that have performed best: global small cap stocks have outperformed global large cap stocks, while in the US the tech-heavy NASDAQ index has outperformed the broader based S&P500 index,” he added.

After the closing bell, Apple reported a record revenue for the June quarter of $83 billion, up 2% YoY. Its share price inched up by 0.4%.

Amazon also reported earnings after hours, posting a quarterly loss of US$2 billion, its second in a row after a US$3.8bn loss in the previous quarter. However its share price surged by 10% after the bell.

In other markets, the yield on the US 10-year Treasury declined 11 basis points to 2.67%, while Bitcoin was up 4% in the last 24 hours to US$23,880.

Iron ore was up 4% to US$117.35 a tonne, and oil prices were flat.

5 ASX small caps to watch today

Prospa (ASX:PGL)
The fintech lender’s full-year EBITDA is estimated at a record $12 million, compared $0.5 million in FY21. Revenue reached $53.9 million, up 61% against pcp.

Pointerra (ASX:3DP)
The data tech company gave a quarterly update, saying that its ACV now totals US$18.2 million (29 July), up US$1.9 million from the 29 April ACV level of US$16.3 million. The company says this was mainly underpinned by deployment of material contracts in the US energy utility sector.

Atomo Diagnostics (ASX:AT1)
The medical devices company says revenue for Q4 was $1.3m, an increase of 89% on the pcp. Revenue for the full year FY22 was $14m, a 108% growth year on year.

Mamba Exploration (ASX:M24)
Inversion modelling of regional airborne EM (AEM) data has identified several bedrock conductors at the Copper Flats Project. These conductors are coincident with interpreted basin growth faults and high-grade copper and silver surface sampling.

Podium Minerals (ASX:POD)
The first assay batch received from the ongoing assaying of pulps from the previously reported 3E PGM intercepts. Results include: 15m at 2.04g/t 5E PGM and 20m at 3.30g/t 5E PGM.