• ASX is set to open higher on Thursday
  • The US Fed raises key rate by 75bp
  • Fed Chair Powell says the US economy is not in a recession

Local shares are set to rise on Thursday and at 8am AEST, the ASX 200 August futures is pointing up by 0.90%.

Wall Street jumped much higher after the US Fed’s decision to raise its key rate by 75bp. The S&P 500 rose by 2.6% while tech heavy Nasdaq was up 4%.

Fed Chair Jay Powell reiterated his commitment to fight inflation, but believes the US economy is not in a recession.

“I don’t think the US is currently in recession. There are too many areas of the economy that are performing too well.”

Powell said he would not rule out a 75-basis point rate increase for the next meeting, but did say that it will likely be appropriate to slow rate increases at some point.

Despite 75bp being on target with consensus, it appears the move and Powell’s comments are seen as less hawkish than the market had anticipated.

“Now that traders see light at the end of the Fed tightening tunnel, the Nasdaq is starting to look like the cleanest dirty shirt in what looks like a 2023 recession bound economy,” said Oanda analyst, Craig Erlam.

“But a clear green light to buy up risky assets won’t happen until we see evidence inflation is coming down.”

Meanwhile,  there were some strong earnings outlook announced by Mega Tech stocks overnight.

Alphabet reported Q2 revenue of US$70bn, up 13% on a year ago. Despite missing estimates, its share price was up 7% on Wednesday.

Microsoft’s Q2 revenue was US$52 billion, and it expects full-year 2023 operating income increase to double digits, sending its share price up 5%.

Meta has reported its first revenue decline ever – a 1% decline in revenue in Q2 to $US28.822 billion, which was below analyst expectations. The Meta share price was up 6.5%.

“It is starting to look like a tale of two earnings seasons. Some companies are delivering profit warnings and signaling a weaker consumer, while others are posting robust results and highlighting easing concerns about softer demand,” said Erlam.

In other markets, oil prices were up 2%, while iron ore was flat. Bitcoin is trading at US$22,850 at 8.30am, up 8% in the last 24 hours.

Later today, we expect to see Australia’s June retail sales, Q2 export and import price index, and Federal Treasurer Jim Chalmers speaking.

5 ASX small caps to watch today

Sezzle (ASX:SZL)
Sezzle’s share price was up 96% yesterday on no news, and the BNPL company put itself on a trading halt at 5pm. Sezzle said it will release an announcement today.

Airtasker (ASX:ART)
Airtasker’s Q4 FY22 Gross Marketplace Volume (GMV) increased to $54.4m (up 38.3% on pcp). Q4 revenue increased to $9m (up 30.6% on pcp). In the US marketplace, demand was up 49% QoQ driven by SEO, organic social and PR-driven customer acquisition.

Openpay (ASX:OPY)
The payments fintech’s total quarterly revenue (including OpyPro) reached a record $8.5m, up 80% compared to pcp. Its quarterly TTV (time to value) was also a record of $97.6m, an increase of 54% compared to pcp.

HeraMed (ASX:HMD)
HeraMED will supply SaaS-based HeraCARE platform licensing and technology to e-Lōvu Health, a clinically guided digital marketplace in the US. The expected revenue to HeraMED from this deal is approximately US$550k.

Syrah Resources (ASX:SYR)
Syrah has received a US$102 million loan from the US Department of Energy (DOE) for the initial expansion of its Vidalia graphite facility in Louisiana to a 11.25ktpa AAM production capacity. Syrah says the DOE loan will allow it to use its surplus existing cash to accelerate its growth strategy.