Market highlights and 5 ASX small caps to watch on Tuesday

The ASX 200 will open Tuesday higher
Sell-off in commodities overnight on weak Chinese data
But Wall Street ends up higher

Local shares are set to open higher today. At 8am AEST, the ASX 200 August futures contract is pointing up by 0.30%.

Weak Chinese economic data released on Monday drove key commodities lower overnight.

According to Stockhead’s own Josh Chiat, while most central banks are hiking rates, the People’s Bank has just cut the 7-day reverse repo rate from 2.1% to 2%, with another 10 basis point cut in its medium-term lending facility from 2.85 to 2.75%.

It shows the Chinese Communist Party is getting pretty concerned about the domestic property market and other indicators like retail sales, which fell to a 2.7% growth vs consensus of 5%.

US data didn’t fare much better. The Empire State manufacturing index fell from +11.1 points to -31.3 points in August, while the NAHB Housing Market index fell from 55 to 49.

Most commodities fell overnight, with Brent crude slipping 4% to US$94 a barrel, and iron ore losing ground by 4% to US$104.40 a tonne. Other metals like copper, nickel, and silver also fell in a broad brushed commodities sell-off.

“The figures from China really are a concern, and the authorities have a big job on their hands arresting flagging domestic demand,” said Oanda analyst, Craig Erlam.

“That doesn’t bode well for oil demand especially when the country remains so committed to zero-Covid. And with cases continuing to rise, the downward pressure on oil prices could intensify.”

Wall Street however rallied, with all three major US stock benchmarks – the S&P 500, Dow and Nasdaq – gaining around half a per cent.

US Treasury yields slipped around 5bps across the curve as traders continue to assess to what extent the recent slowdown in inflation could impact the Fed’s monetary stance.

The FOMC meeting minutes will be released tomorrow (US time) which should give more insight into the Fed’s train of thoughts.

Meanwhile, Bitcoin was down 1% in the last 24 hours to trade at US$24,095. BTC has tested the water above $25,000 and was pushed back on that first attempt.

“It seems the cryptocurrency, like many other instruments, is testing a potentially significant barrier following the recent recovery, and we may be seeing some profit-taking,” said Erlam.

“Whether that becomes a full rotation lower isn’t clear yet, but it doesn’t appear to have the momentum for a breakout at this time,” he added.

Looking ahead today, scheduled to be released (according to Commsec) are: the CBA household spending intentions and the RBA’s Board meeting minutes.

5 ASX small caps to watch today

Life360 (ASX:360)
Mobile app maker Life360 continues its momentum with with Monthly Active Users (MAU) up 29% in the first half. Subscription revenue was up 90%, and Annualised Monthly Revenue (excluding hardware) was $174 million, a 65% year-on-year uplift.

Temple & Webster (ASX:TPW)
Revenue for the full year FY22 was $426.3m, and was 31% up on last year. Net Profit Before Tax was $13.2m, down 31% on last year but represents a 2-year CAGR of 29% vs FY20.

Betmakers (ASX:BET)
Betmakers’ subsidiary OM Apps has revised its agreement with NTD to provide technology and services to the new NTD wagering venture which is scheduled to launch in Australia this year. Under the new contract, the cap on the Annual Fee payable by NTD to OM Apps will be increased by an incremental $2 million per annum for each year during the initial 10-year term – providing a maximum cap increase of $20 million over this period.

Nexus Minerals (ASX:NXM)
Nexus announced further broad high-grade gold assay results from reverse circulation (RC) drilling completed at the Crusader – Templar Prospect at its Wallbrook Gold Project in WA. Results include: 23m @ 3.03g/t Au (within 61m @ 1.60g/t Au from 28m); and 2m @ 10.66g/t Au (within 7m @ 3.28g/t Au from 173m).

Sezzle (ASX:SZL)
For the first half, Sezzle reported a 10.6% increase in UMS (underlying merchant sales) of US$869.6m. Both active consumers and active merchants grew by 18%. Total income was US$56.8m, a 6.5% increase on the pcp.