Market highlights and 5 ASX small caps to watch on Monday

The ASX is set to open slightly lower on Monday
US social media stocks tumbled on Friday, with Snap plunging by 39%
Ahead this week, US Fed’s rate decision and Australia’s June quarter CPI

Local shares are set to dip on Monday, with the ASX 200 index trading lower by 0.2% at 8am AEST.

On Friday, US stocks fell after some disappointing earnings results particularly from social media stocks.

Snap Inc fell by 39% after posting a US$422 million loss for Q2. Meta also fell 7.5% as social media stocks saw more than US$130 billion wiped off their market cap.

All three major US stock market indices finished lower – the S&P 500 by 0.83%, the Dow by 0.43% and tech heavy Nasdaq by 1.87%.

US 10 year Treasury yield fell by 15bp to 2.75%, its lowest in two months as traders put their bets ahead of Tuesday’s (US time) Fed rate hike decision.

“The Fed must continue hiking aggressively if it wants to get a handle on the inflation problem, even if it means speeding up a recession problem,” said Seema Shah, chief global strategist at Principal Global Investors.

In June, headline US CPI reached a fresh four decade high at 9.1% y/y, surpassing even elevated expectations and firmly dispelling any lingering hopes that the Fed could soon end its hiking cycle. A 0.75% or 1.0% hike is now on the cards.

“I know not, although my gut says 0.75%,” says Oanda analyst, Jeff Halley.

Halley says that inflation remains and will remain stubbornly high, geopolitical risk abounds, growth is slowing around the world, and recession risks are rising.

“I can’t see how that is a productive environment for equities, and that’s before the rest of big-tech reports quarterly earnings,” he added.

Meanwhile, Australia will also release its CPI for the June quarter this Thursday.

The latest reading for March was 5.1%, but major banks like ANZ and Westpac have now predicted that to rise to 6.1% in the June quarter.

Most banks also agree that the RBA would hike all through 2022 to take its cash rate to a terminal rate of 2.6% before stopping. The next RBA rate decision is on August 2.

In other markets, iron ore prices jumped almost 6% to US$104.55 a tonne, oil prices were lower by around 2%, and Bitcoin is trading at US$22,845 this morning, up 2% in the last 24 hours.

5 ASX small caps to watch today

Resonance Health (ASX:RHT)
Resonance’s FerriScan, its flagship product, is now available for use on Tesla 3T MRI scanning machines (not related to the Tesla company). 3T MRI machines are the newer generation of MRI scanning machines, and are prevalent in hospitals and MRI centres globally, with increasing popularity and usage.

92 Energy (ASX:92E)
92E has intersected near surface uranium mineralisation at the GMZ Uranium Discovery in Canada starting at 60m below surface. Results indicate that GMZ remains open in several directions, and drilling will continue along strike to the northeast and southwest of currently defined mineralisation.

Dreadnought Resources (ASX:DRE)
RC drilling at the Yin Rare Earth Element prospect in WA has confirmed potential, with mineralised ironstones identified over 3km of strike and remaining open in all directions and at depth. Initial assay results have experienced delay in the lab, and are now expected in late July 2022, with further assays expected to follow regularly thereafter.

Proteomics (ASX:PIQ)
Patent protection for the PromarkerD predictive test for diabetic kidney disease has expanded to cover prediabetes in Europe. The original European patent was restricted to diabetic kidney disease only. But the new patent will provide protection for any individuals with prediabetes, which is an at-risk category for kidney disease.

Thor Mining (ASX:THR)
Rock chip sampling over the 13km-long Sterling Prospect returned up to 6g/t Au in rock chip. At the Kelly’s Prospect, anomalous gold (up to 1.46g/t) and copper (4.8% Cu) have been identified along the northwest trending.