Market Highlights and 5 ASX Small Caps to watch on Tuesday

Wall Street mixed, Square jumps 10pc

US stock markets were mixed overnight, as America’s top infectious disease doctor, Dr. Anthony Fauci, warned of “more pain and suffering ahead.”

The Dow Jones fell by 0.28%, S&P 500 was down 0.18%, and tech heavy Nasdaq was up slightly by 0.06%.

Square jumped by 10% after its Afterpay acquisition announcement, as it reported an increase of 91% in its gross profit year-on-year.

During an investors’ call, CEO Jack Dorsey outlined his plans for Afterpay post-acquisition.

In other markets, the benchmark 10-year US treasury yield slipped 6bp to 1.17%, while oil prices also dropped by almost 4% as COVID cases surge.

To cryptos, where Bitcoin is trading lower at US$39,300 level at 8:00am AEST, from the US$41,100 level on Monday.

Saudi Aramco, a multi-billion-dollar company and the biggest producer of oil on the planet, has refuted rumours it’s embarking on Bitcoin-mining ventures.

ASX 200 to open higher ahead of RBA meeting

The ASX 200 looks set to open higher this morning, with futures markets (September contracts) pointing up by 0.50% at 8:30am AEST.

On Monday, the benchmark index closed 1.34% higher as the Afterpay deal buoyed sentiment on bank stocks, pushing the Financial sector up by 1.75%.

The RBA Board will convene for its monthly meeting starting today. Markets will be looking for any changes to the RBA’s plans to taper its bond buying program in mid‑September as originally announced in July, or to reverse it given the changing economic situation.

5 ASX small caps to watch today

Electro Optic Systems (ASX:EOS)
The aerospace defence focused company announced the formation of the Sovereign Missile Alliance, a joint venture (JV) between EOS and Nova Systems. The JV was created to compete for the government’s sovereign missile enterprise program.

PharmAust (ASX:PAA)
The clinical stage biotech company said its wholly-owned subsidiary Epichem has completed the build of OHD (Oxidative Hydrothermal Dissolution) benchtop flow reactor to develop its waste to fuels technology. The OHD technology will convert biomass and feedstock into into a wide range of valuable fuels, fine chemicals, and fertilisers.

Good Drinks (ASX:GDA)
The beverage company reported a 1,683% increase in full year FY21 EBITDA to $10.7m, off the back of a 40% increase in top line revenue of $51.6m. These figures are against full year FY20 rssults.

Lithium Australia (ASX:LIT)
The company has filed a provisional patent application in Australia, relating to the recycling of alkaline batteries. The alkaline battery separation process was used to generate samples for the 2021 micronutrient field trial programme undertaken by Envirostream Australia, a 90% subsidiary of LIT.

American Rare Earths (ASX:ARR)
Drilling at La Paz has delivered an increase of 117% in ARR’s indicated resources estimate to 35.2 million tonnes (MT). As a result, its JORC 2012 compliant total resource tonnage has now increased by 33.1% to 170.6 MT.

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