• Aussie Futures lower, but shares likely to show reilience
  • RBA cash rate decision to be the main focus 
  • Markets expect central bank to hold rates steady at 4.1 per cent on Tuesday

 

Futures for the benchmark ASX200 are trading 38 points lower, down -0.55% as of 8:30am AEST,  but really Wall Street should be salivating to get into October with hanging drool lines of relief that September is a done deal.

It’s a holiday for NSW, SA, ACT and Queensland, after Melbournites took Friday off for the footy.

In the States, the S&P 500 finished lower last Friday as Energy and Financial stocks sold off, closing out its worst month and quarter of 2023 thus far.

The S&P 500 fell -0.3%, the Dow Jones Industrial Average lost -0.5%, and the Nasdaq Composite crept ahead by +0.1%.

The Fed’s preferred measure of inflation – the US personal consumption expenditures (PCE) index which cuts out volatile food and energy segments – came in lower than the expected for August at +0.2% on Friday.  Consumer spending rose +0.4%, down sharply from +0.9% in July.

A horribly late US Congress somehow avoided another US government shutdown, sending legislation to extend funding to the White House just a few hours before the machinery kicked in.

The yield on the US 10-year Treasury returned to 4.58%, where it was late on Thursday in New York, after temporarily retreating on Thursday, giving MegaTech investors a moment of sunshine which they took. Meta Platforms gained over 2% and Nvidia climbed 1.5%.

And, despite some mixed quarterly results shares in Nike (NKE) surged against the grain on Friday, closing +6.7% higher.

Oil prices have fallen 1%, with the global benchmark Brent crude just above $US92 a barrel and West Texas at $US90.80.

Back home, the focus this week will be on the RBA meeting on Tuesday data.

The last session in Sydney was light on volume, if not excitement. The Materials Sector put on the big show, gaining +1.2%, as lithium and battery mineral stocks rose.

Core Lithium (ASX:CXO) reported earnings on Friday and the stock flew out the gate almost 20% higher after an abominable run in 2023 thus far.

This excited traders to take a shot at many of the other lithium miners, many of which are on the ASX most shorted stocks list, as Sayona Mining (ASX:SYA)  found +7%, and graphite miner Syrah Resources (ASX:SYR) hiked +14.5%.

Also supporting materials was China’s manufacturing PMI for September which, after four months of increases, crept over into expansion (at 50.2). The services PMI rose to 51.7 from 51.0.

Tuesday is all about the RBA Board and Governor Michele Bullock’s first OCR decision.

Most analysts have pegged rates to be left on hold for the fourth consecutive month.

“We expect the post‑meeting Statement will retain a tightening bias given the Board’s concerns around sticky services inflation and future wages growth. In our view, the dataflow since the September Board meeting will not pass the high bar we believe the Board has to tighten policy,” CBA says.

As per last month’s SOMP (policy meeting minutes) the board toyed with adding another 25 basis points before agreeing to hold at 4.1%.
 

In other markets …

10-year US bond yields remain intimate with their highest levels since 2007.

Gold price down 1% toUS$1,847.87 an ounce.

Crude prices – Brent is flat and WTI up about 0.2%. September saw a 12% increase in the US oil benchmark, and the third quarter recorded a 29% surge.

Iron ore prices are flat on Monday morning at US$119.50.

The Aussie dollar is shorter by -0.05% to US64.30c.

Bitcoin meanwhile is up +0.4% in the last 24 hours to trade at US$27,180.

 

5 ASX small caps to watch today

Galileo Mining (ASX:GAL)
GAL says it’s clocked a “Platreef” style of PGE-gold-nickel-copper deposit in Australia – offering a Maiden Indicated and Inferred Mineral Resource Estimate for the Callisto Pd–Pt–Au–Rh–Ni–Cu sulphide deposit at: 17.5 Mt @ 1.04g/t 4E1, 0.20% Ni, 0.16% Cu (2.3g/t PdEq or 0.52% NiEq).

The company says contained metal includes 585,000oz 4E, 35kt Ni and 28kt Cu (~1.27Moz PdEq or ~91,000t NiEq).

GAL adds that 95% of the resource is ‘constrained by pit optimisation and remains open at depth with potential for additional resource delineation.’

The company says that the Callisto discovery marks a new mineral province where Galileo controls all the prospective ground within a 255km2 project area. Assay results pending from the most recent drill program with the next round of exploration drilling planned to commence in late October 2023.

Dreadnought Resources (ASX:DRE)
DRE says a new survey at its Gifford Creek Carbonatite project has extended the site to more than 17km in strike and over 1km in width (more than three times larger than originally interpreted).

“Significantly, this is now similar in size and age to the massive Bayan Obo carbonatite (Hong-Rui Fan, et al. 2016) which hosts three world-class rare earth deposits and accounts for ~50% of global rare earth production. The company says this ‘underscores the significant upside potential of rare earths at Mangaroon.’

Biotron (ASX:BIT)
The genetics cell-focused biotech company has been getting a couple of speeding tickets from the ASX as the company’s share price surged.

The company has released a letter to investors, saying that it is in the final stage of three Phase 2 clinical trials for HIV‐1, and COVID‐19.

“This is a pivotal time for the company as it completes data collection and analyses of samples and information collected during the trials ahead of release of headline data in coming weeks,” said the company.

Veem (ASX:VEE)
Veem (ASX: VEE) The Aussie designer and manufacturer of ‘disruptive, high-technology marine propulsion and stabilisation systems for the global luxury motor yacht, fast ferry, commercial workboat and defence industries’, (VEE make cool propellers) says it’s struck JV deals with Sharrow Engineering to partner together to design and then VEEM to exclusively manufacture and sell Sharrow propellers worldwide, up to 5m in diameter, for inboard motor vessels.

Progressing with the project is subject to VEE’s ‘acceptance of the performance of the Sharrow design’ on test vessels with the testing to be done over the coming weeks.

Veem’s chairman, Brad Miocevich says the Sharrow propeller technology has revolutionised the outboard motor market.

VEE adds that the total addressable market for inboard propellers is estimated to be US$2.6 billion with the annual new build market estimated at US$338 million.

Cyclopharm (ASX:CYC)
CYC reports that the US Food and Drug Administration (USFDA) has given approval for the company to strat commercial sales of Technegas in the US market. The approval paves the way for CYC to jump into ‘the single largest market for Technegas globally, and one which the company estimates to be initially worth approximately US$180 million annually for the diagnosis and management of Pulmonary Embolism (PE)’.

“Commercial rollout can commence immediately and Cyclopharm will now complete final assembly of its first wave of 200 generators, with plans for the first air shipments to arrive in the US by early November,” the company says.

Cyclopharm will also execute its planned marketing strategy which will leverage the company’s sales and operational expertise across 64 countries globally in which the product is already approved and established.

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