• The ASX is poised to retreat modestly at the open on Tuesday
  • JPMorgan has officially acquired First Republic Bank
  • Eyes will focus on the RBA rates decision at 2.30pm AEST today


The ASX is poised to retreat at the open on Tuesday, tracking moves in New York ahead of the RBA rates decision later today. At 8am AEST, the ASX 200 May futures contract was pointing down by 0.10%.

Overnight, US stocks finished modestly lower – the S&P 500 down by 0.05%, the Dow Jones by 0.14% and tech-heavy Nasdaq index by 0.11%.

JPMorgan has officially won the government auction to acquire First Republic Bank, in a deal to resolve the largest US banking failure since the 2008 financial crisis.

During the conference call, JPMorgan CEO Dimon said the deal has not changed the odds of a recession, but it will help to stabilise the banking system. JPMorgan shares rose 2%.

This latest development is expected to have an impact on what the Fed may do at its monetary policy meeting tomorrow.

“The Fed will likely be confident banking jitters are fading, but given the recent boost of inflationary pressures, they might hold off signalling they are ready to hold rates steady after one more hike,” said Oanda analyst, Edward Moya.

In other stocks, Norwegian Cruise Line rose 9% after raising its full-year profit guidance. General Motors gained 1.3% following a Morgan Stanley upgrade.

Apple is set to reports its earnings later this week, while IBM CEO Arvind Krishna said that hiring will be paused for roles he thinks could be replaced with AI in the coming years.


Bitcoin end of year prediction

Bitcoin fell almost 5% in the last 24 hours to US$27,982.

Comparison site Finder asked 32 experts to give their end-of-year price predictions for BTC. The survey found that BTC could end up around US$35,458 by the end the year, before rising to US$99,781 by 2025.

Crude prices fell 1.5%, with WTI trading now at US$75.67 a barrel.

The oil market is still on high alert after the Iranian Navy intercepted a Turkish-owned oil tanker carrying 24 Indian crew members that was headed for the US.

Gold was down 0.4% to US$1,982 an ounce. Treasury yields were surging last night ahead of the Fed decision, and that was bad news for bullion.

Meanwhile, data showed that US manufacturing activities contracted again in April, and is at a three-year low amid tighter credit.

Despite the sluggishness, data also showed it is contracting at a slower pace of weakness than previous months, which indicates things are bottoming out.


RBA preview

Back home, eyes will focus on the RBA rates decision at 2.30pm AEST today as investors look to see if bank governor Philip Lowe and his board members will keep rates on hold once again.

Quarterly inflation data last week showed inflation has eased from its peak, coming in at 7%.

“We believe today’s meeting will be a repeat of April with the RBA declining to hike rates,” said Scott Solomon, co-portfolio manager at T. Rowe Price.

Solomon said the RBA paused in April because the board wanted to see how the economy evolves during this period of heightened mortgage resets.

“They will likely attempt a hawkish tone by dangling the possibility of further hikes based upon evolving data, but it is very likely we have already reached the terminal rate.”

Solomon also thinks there are political pressures weighing on the commitment to support a pause.

“However, if Governor Lowe ultimately determines that a rate hike is necessary, there are data points available to support such a decision. We recognise the outcome of the meeting is not fully locked in.”


5 ASX small caps to watch today

Embark Education (ASX:EVO)
The early childhood education company reported that its occupancy continues to grow strongly. In April, the occupancy rate was 81.8%, versus 76.9% in the pcp. For the quarter, Australian revenue was $13.9 million, up or 21% on the pcp. Australian Centre based EBITDA was $3m, up 47% on the pcp. The company also announced its intention to delist from the NZ stock exchange.

C29 Metals (ASX:C29)
C29 said the experimental results for the 10-stage counter-current extraction Ekosolve process shows that lithium extraction efficiency achieved was 95.79% after passing through a 10-pass extraction cycle. Lithium recovered from 95.3ppm Li in brine was 91.3ppm Lithium. Lithium chloride produced is now being converted into Lithium Carbonate in the next stage of processing.

8Common (ASX:8CO)
Fintech company 8common announced that it has received a further material contract under the Australian Government GovERP deed. Total Contract Value is $872k including GST for implementation and ongoing transaction and SaaS recurring revenue. The contract will see the implementation of an additional agency into the Service Delivery Office (SDO) of the Department of Finance.

Kula Gold (ASX:KGD)
Kula reported excellent progress on potential lithium bearing pegmatites at its Brunswick Project and the recently acquired Kirup Project in WA. Historical BHP diamond drill core was found at the GSWA Core Library in good condition, and a pegmatite was identified at 73m depth in hole DDB-1, in addition to a high-grade gold result of 1m @ 51g/t gold from 39m previously intersected.

Echo IQ has entered into a US partnership with MedAxiom, an American College of Cardiology company. MedAxiom is linked to over 475 cardiovascular organisations in the US. Echo IQ also appointed Hydrix Medical as sales partner for Australia, New Zealand, Singapore.