• US Fed raises cash rate by 75bps
  • Wall Street rises after the decision
  • ASX is set to open higher this morning

The US Fed’s decision to hike rates by 75bps overnight has sparked a rally on Wall Street.

All three major US stock indices rose after Fed Chairman Jerome Powell spoke – with the S&P 500 rising by 1.46%, the Dow by 1% and Nasdaq by 2.5%.

After ordering the biggest rate increase in 28 years, Powell said: “I do not expect moves like this to be common. Inflation has obviously surprised on the upside, and further surprises could be in store.”

“The next meeting (in July) could be a decision between 50 and 75 basis points… putting us in that more normal range,” Powell continued.

According to Oanda market analyst, Edward Moya, the decision by the Fed was not a difficult one to make.

“Wall Street made this an easy policy decision for the Fed, as the two-year Treasury yield surged from 2.83% to over 3.40% since Friday’s inflation report,” Moya said.

The 10-year treasury yield has also jumped from 2.39% in April to 3.48%, the highest level in 11 years.

Tech got a particular boost after the Fed speech, with stocks like Amazon and Netflix jumping by 5-7.5% to their biggest gains in a month.

On the ASX, we expect some activity within the Energy sector today after the Australian Energy Market Operator (AEMO) suspended the spot market for wholesale electricity on Wednesday afternoon.

“It has become impossible to operate the spot market in accordance with the provisions of the rules,” the operator said.

“By suspending the market, we are creating a simple process where AEMO has true visibility of which generators are available and when in advance, rather than relying on last-minute interventions.”

Local shares meanwhile are set open higher this morning. At 8.30am AEST, the ASX 200 June futures contract was pointing up by 0.24%.

Bitcoin has also managed to gain some ground, up by 1% to US$22,350 this morning.

5 ASX small caps to watch today

Bubs Australia (ASX:BUB)
Bubs has entered into a supplier agreement with Walmart USA to purchase a shipment of six Bubs Infant Formula products, and two Aussie Bubs Toddler Formula products which will be distributed to about 800 Walmart stores in the US. Bubs is now preparing to send a second aircraft, containing around 85,000 tins of Bubs Infant Formula under ‘Operation Fly Formula’, to be airlifted at 5pm today from Melbourne to Columbus, Ohio.

Identitii (ASX:ID8)
Dutch multinational Rabobank has signed a five-year Software Licence Agreement (SLA) with Identitii. Rabobank will use Identitii’s cloud-hosted reporting platform, to help further automate IFTI reporting to AUSTRAC. The five-year SLA consists of an annual recurring licence fee of $0.1m, and an initial $80k payment.

The Reject Shop (ASX:TRS)
The company announced the appointment of Phillip Bishop as its new CEO starting from 11 July. Bishop is an experienced retailer with 30 years of experience, most recently holding senior roles at Bunnings. He will be joining as the company transitions into the ‘grow’ phase of its turnaround strategy.

Burgundy Diamond Mines (ASX:BDM)
Burgundy has unveiled an ultra-luxury diamond brand it calls Maison Mazerea. Maison Mazerea, which has been inspired by the famous 17th century diamond collection bequeathed by Cardinal Jules Mazarin to Louis XIV and the French Crown Jewels, will be officially launched in Paris in early July.

Metals Australia (ASX:MLS)
Metals Australia is set to acquire key battery metals and gold projects in WA and Northern Territory, including tenements with multiple nickel, copper and gold targets in Tier 1 locations.