Wall Street falls as IMF warns of inflation

US stock markets fell for the third consecutive day, as the International Monetary Fund (IMF) cuts its global growth projection from 6.5% to 5.9%, and warned about inflation.

The IMF told the BBC that inflation will “stay elevated” for the next few months, and that nations should stay ‘absolutely vigilant’ about the risks.

All three US stock market benchmarks were down – the Dow Jones by 0.34%, the S&P 500 by 0.24% ,and tech heavy Nasdaq by 0.14%.

Investors have been trading cautiously ahead of the start of earnings season, as supply chain and production issues are expected to chip away at profits.

Oil prices eased overnight, with Brent crude falling modestly by 0.3% to US$83.42/barrel. The benchmark crude oil is currently at a three-year high, with Goldman Sachs expecting it to hit US$90 by year end.

The spot iron ore price also eased by 6% to US$128.50/t. Iron ore futures have risen by 50% in the past three weeks, joining aluminium’s recent resurgence to a 13-year high.

Meanwhile, Bitcoin has run out of puff, and has pulled back to US$55,500 at 8:00am AEST this morning from the US$57,100 level on Tuesday.

The market is wary that a further BTC pullback could retest previous levels of resistance around US$52K.


ASX 200 to open higher on Wednesday

Despite the action on Wall Street overnight, the ASX 200 looks set to open slightly higher this morning, with futures markets (December contracts) pointing up by 0.19% at 8:30am AEST.

Yesterday, the Aussie benchmark retreated 0.26% to close at 7,821 points, with all sectors in the red except consumer staples and healthcare.

Australian businesses are showing renewed optimism about the economy, with the NAB business confidence survey released yesterday showing a big spike for September, up 19 points from the previous reading.

On the IPO front, scheduled to list at 1pm AEST is iron ore explorer Equinox Resources (ASX:EQN), which raised $9m in its IPO at 20c per share.

5 ASX small caps to watch today

Resonance Health (ASX:RHT)
The medical imaging tech company has unveiled its newest AI medical device, LiverSmart, which provides a more comprehensive assessment of a person’s liver and potentially helps patients to avoid the need for separate MRI sessions. The device is currently undergoing final quality and verification checks prior to its submission to the US FDA.

Paradigm Biopharma (ASX:PAR)
The company has released top line results from the study of pentosan polysulfate sodium (PPS) in the influenza model of acute respiratory distress syndrome (ARDS). The results showed that PPS treatment reduced lung inflammation, improved oxygen saturation and reduced weight loss compared to standard treatment. The next step for PAR is to validate these findings on path to a possible clinical trial.

Bubs Australia (ASX:BUB)
The company’s Q2 total gross revenue surged by 96% over last year’s previous corresponding period (pcp) to $18.5m. The growth was mainly achieved on the back of its Bubs Infant Formula and Adult Goat Milk Powder products, both doubling in revenue from last year’s pcp.

Propel Funeral (ASX:PFP)
The company’s revenue for Q1 of FY22 grew by 13% despite COVID-19 impacts and restrictions on holding funeral gatherings. The company expects its trading performance to improve further as we come out of lockdowns.

Lepidico (ASX:LPD)
The chemicals company has demonstrated that it can produce catalyst grade caesium compounds. Samples of both caesium sulphate and caesium hydroxide have been generated, and are in the process of being dispatched for customer assessment. The caesium market is currently undergoing a tight squeeze due to supply constraints, and LPD’s product could be a viable alternative.