Market Highlights and 5 ASX Small Caps to watch on Monday

ASX to open the lower on the first day of the new Labor government
Experts say there will be renewed focus on renewables under the new PM
Germany’s producer prices soar by a record 33%

Local shares are set to drop lower on the first day of trading under the new Labor government.

At 8.30am AEDT, the benchmark ASX 200 is pointing down by 0.2%, after a gain of 1% last week.

Wall Street had a relatively quiet Friday after a punishing week, with all US stock market benchmarks closing flattish.

But last week’s selloff means the S&P 500 index has declined for its seventh consecutive week, the longest streak in more than 20 years.

On Friday, investors continued to reposition away from rates sensitive stocks, as they weigh up the latest inflation data coming out of Germany.

Germany’s producer prices soared by a record 33.5% in April, with energy prices surging by 87% from a year earlier.

All eyes will now be on European Central Bank President Christine Lagarde, who is due to make a couple of speeches this week.

The hawkish Fed Reserve Bank of St. Louis President James Bullard made comments last Friday that he would like the US Fed to front-load the rate hikes this year, which he said could lead to policy easing in 2023 or 2024.

“I have said that we should get to 3.5 per cent by the end of the year, which is higher than some of my colleagues,” Bullard told Fox Business.

“The more we can front-load and the more we can get inflation and inflation expectations under control, the better off we will be.”

Back home, experts say Labor’s election victory will put renewed focus on aged care, childcare and energy stocks starting on Monday. There’s a strong expectation the new government would put forward greater clarity on climate change and renewables.

Meanwhile, Bitcoin was trading at US$30,105 at 8am AEDT.

Stockhead has reached out to Angus Brennan, a founding partner of Sydney fund manager Balmoral Digital to chat about the US$60 billion Terra ecosystem implosion.

Read all about it here on Stockhead.

5 ASX small caps to watch today

Living Cell Technologies (ASX:LCT)
LCT is entering a new phase in its research, with artificial intelligence (AI) to be applied to the company’s research in Parkinson’s disease. LCT says the use of AI will ensure that the NTCELL product being manufactured for the company’s third clinical trial of NTCELL in Parkinson’s disease is of the highest possible quality.

McGrath (ASX:MEA)
The real estate services company says it expects full year underlying EBITDA results for FY22 to be in the range of $18m to $20m, with the midpoint being approximately 8% above the previous year. However, Net Profit After Tax (NPAT) is expected to be lower in FY22, given the one-off abnormal items of about $6 million posted in the pcp.

Knosys (ASX:KNO)
The software company says Healthdirect Australia has signed a 2-plus-2 year contract for Knosys’ knowledge management platform, KnowledgeIQ. The value of the contract over the extended four-year period is expected to exceed $650k, with licence fee revenue expected to commence in the September quarter after an implementation project period of approximately three months.

Tesoro Gold (ASX:TSO)
Mineral Resource Estimate (MRE) at the Ternera East deposit within the El Zorro project in Chile has increased to 1.1Moz at 1.12g/t Au, at a 0.30g/t Au cut-off. Successful infill and extensional drilling programs completed since July 2021 have also increased total ounces by +66% to 1.1Moz.

Zenith Minerals (ASX:ZNC)
A new lithium project, Mt Ida North, has been secured by Zenith in WA under an option to purchase arrangement. The project will be explored in conjunction with the EV Metals Group under the Australian Lithium Alliance (ALA), which is a separate arrangement to the existing Zenith Lithium joint venture with EV Metals Group.