• The ASX will open more than 1% lower on Monday
  • Wall Street tumbled again on Friday on recession fears
  • UK announced historic tax cuts

Local shares are set to open much lower on Monday. At 8am AEST, the ASX 200 October futures contract is pointing down by 1.25% following last week’s 4% loss.

On Friday, Wall Street sold off once again with all three major indexes (S&P 500, Dow Jones, and Nasdaq) tumbling by around 1.7% each, capping off a terrible week (-5%) for US investors.

Stocks have been dipping since the Fed hiked its rate by 75bp last Wednesday as Chairman Powell acknowledged the US economy could slip into a recession.

“It’s very hard to say with precise certainty the way this is going to unfold,” Powell said last week.

In the UK, Chancellor Kwasi Kwarteng announced a historic tax cut and pledged further tax cuts.

“There’s more to come,” Kwarteng said in a BBC television interview on Sunday.

The tax cuts have fuelled concerns that inflation could accelerate further as more money stays in people’s pockets.

Asked about the FTSE 100’s 2% selloff after the tax announcement was made, Kwarteng added: “Markets move all the time. I don’t comment on market movements.”

The tax reduction has also caused the pound sterling to fall to a 37-year low of US$1.08, making the prospect of parity for the first time in history a real possibility.

In company news, retailer Costco slumped 4% despite reporting fiscal Q4 results that beat expectations.

Rising bond yields are also causing havoc in tech stocks as Amazon, Apple, and Meta fell by around 1.5%-3% on Friday.

In other markets, oil prices fell another 5% on Friday on recession fears, the lowest since before the start of the war in Ukraine in January. The benchmark Brent is now trading at US$86.80 a barrel.

Gold meanwhile is at US$1,645.50 an ounce.

“Everything is going wrong for gold – strong dollar, weakening jewelery demand as China’s outlook continues to deteriorate, central banks are not focusing on buying bullion, and the bond market remains its worst enemy,” says OANDA analyst Edward Moya.

Bitcoin traded 3% weaker on Friday, and is now at US$18,819.

“On a day when stocks are down over 2%, you would expect Bitcoin to be down double or triple that and not just around 3% weaker, which could mean many long-term holders remain unfazed,” said Moya.

Back home, the CEO of ASX-listed produce farming company Costa Group, Sean Hallahan, will resign from his post effective today. The Costa share price has been down by 20^% this year despite revenue rising by 16% in the first half.

Looking ahead this week, crucial economics data to be released include the Australian ABS Monthly CPI indicator for July and August on Thursday, and the US Q2 GDP also on Thursday (US time).

5 ASX small caps to watch today

Thor Mining (ASX:THR)
Drilling has commenced at the company’s 100%-owned Wedding Bell and Radium Mountain Projects, located in the historic uranium-vanadium mining district within the Uravan Mineral Belt, southwest Colorado. “As uranium prices rise and the US looks to secure domestic uranium supply, Thor is in an excellent position to advance this promising US asset,” says CEO, Nicole Galloway Warland.

Micro-X (ASX:MX1)
The company’s US subsidiary Micro-X Inc has been awarded an extension on its development contract with the US Department of Homeland Security (DHS). The extension contract will see Micro-X delivering a second prototype Miniature CT Baggage Scanner to the DHS. This will add another US$0.44 million contract payment on top of the existing US$1.57 million contract.

Superloop (ASX:SLC)
Superloop will acquire VostroNet, a provider of wholesale Fibre-to-the-Premises (FTTP) access networks and purpose built student accommodation broadband. The acquisition consolidates and expands Superloop’s strong managed wifi position into adjacent On-Net broadband markets. Consideration is for $35 million, comprising $24.5 million in cash and $10.5 million in Superloop shares.

Austral Resources (ASX:AR1)
Austral and Glencore’s Mount Isa Mines (MIM) have agreed to spend $8.3m in binding earn-in agreements to explore Austral’s exploration permits (within JV area) surrounding MIM’s Lady Loretta zinc, lead, silver mine, and Austral’s Lady Annie copper mine. Under the earn-in agreements, the parties agree to share exploration data and certain resources.

Greenwing Resources (ASX:GW1)
Greenwing announced a strategic funding transaction with NIO Inc, enabling Greenwing to accelerate its exploration program at San Jorge Lithium Project in Catamarca province, Argentina and aligning NIO as the company’s potential joint venture and offtake partner. NIO is a pioneer and a leading company in the premium smart electric vehicle market and is listed on the New York Stock Exchange.