• The ASX is set to partially bounce back on Tuesday
  • Wall Street and European stock markets lifted ahead of the Fed rates decision
  • Stricken First Republic Bank crashed another 47%

 

The ASX is set to bounce back this morning and recoup some of yesterday’s losses. At 7.30am AEDT, the ASX 200 April futures contract was pointing up by 0.65%.

Overnight, investors helped Wall Street to a relief rally as the S&P closed 0.89% higher, the Dow Jones up by 1.20%, and tech heavy Nasdaq by +0.39%.

Stock markets across Europe also lifted by around 1% as the focus now turns to the Fed rates decision on Wednesday (US time).

The market is still pricing in a 60% chance of a 25 bps rate hike, before a pause and then some cuts.

“US stocks are wavering as risk aversion won’t be going away until markets are confident that the Fed is done with their rate hiking campaign,” said Oanda analyst, Edward Moya.

Goldman Sachs is predicting a recession in the US, and a risk-off climate for stock markets in the foreseeable future.

“Market-implied recession risk for the next 12 months has picked up above 50 per cent, with Fed pricing being a core driver.

“There has also been a material repricing of risk premia for banks in equities and credit,” said the note from Goldman.

 

Market movers overnight

In stock news, First Republic Bank crashed 47% and has now lost 90% of its market cap in the space of a few weeks.

The San Francisco-based bank, which caters to the ultra rich like Mark Zuckerberg, was downgraded deeper into junk status by S&P Global and may need to raise more funds despite a US$30bn rescue last week.

Signature Bank, which has already been seized by regulators, says its deposits have found a buyer in Flagstar Bank, which bought the majority of deposits and some loan portfolios of the failed crypto lender.

Starbucks gained 1% after the coffee company named Laxman Narasimhan as its new CEO.

Amazon rose 1.25% after saying it would eliminate another 9,000 more jobs, taking total redundancies to 27,000 so far this calendar year.

Energy stocks paced the S&P 500 sectors higher in late trade as crude prices lifted around 1.25%, with WTI trading at US$67.65.

Oil prices lifted despite Goldman Sachs abandoning its US$100 target this year over the stress to the banking system.

“Oil still looks heavy because it looks like too many traders are expecting the Fed to pause going into this FOMC meeting,” said Moya.

 

What’s happening elsewhere

TikTok CEO Shou Zi Chew will testify before the US House Energy and Commerce Committee on Thursday to alleviate US lawmakers’ privacy concerns.

Chinese President Xi Jinping is in Moscow or a three-day meeting with Russian President Vladimir Putin. Putin said Russia is ready to discuss China’s initiative for ending the conflict in Ukraine.

Economist Samuel Hammond speculated on Twitter about how Microsoft’s workplace AI tools could change our performance reviews at work forever.

In other markets, spot gold was down 0.65% while Bitcoin fell 0.35% in the last 24 hours to US$28,140.

BTC has basked in the global banking chaos, but the question is, how long will this rally last?

Joe DiPasquale, CEO of digital asset manager BitBull Capital, said “From a technical aspect, the current price action is overheated and we could see a correction toward $25K in the near term.”

Looking ahead to today’s session on the ASX, the RBA Board March meeting minutes will be released, along with the ANZ and Roy Morgan weekly consumer confidence index.

 

5 ASX small caps to watch today

Strategic Elements (ASX:SOR)
SOR has announced multiple Energy Ink battery breakthroughs. Testing has shown a further 225% increase in power output, and importantly, for the first time, an ultra-stable output voltage was demonstrated from moisture. Stable output voltages are critical to power the sensitive electronic circuits contained in many electronic devices, enabling them to perform more reliably and without error.

Caspin Resources (ASX:CPN)
New Moving Loop Electromagnetic (MLEM) anomaly has been identified north of Serradella. The survey has identified a large conductor to the north of the Serradella Prospect, which is determined to be a high priority target for drill testing. The conductor lies along strike of recently reported high-grade PGE mineralisation, such as 8.9m @ 2.47g/t 3E & 0.22g/t Ni.

Firebrick Pharma (ASX:FRE)
FRE’s Phase 3 clinical trial of Nasodine Nasal Spray as a treatment for the common cold has received the necessary ethics approvals to re-open for the 2023 common cold season. Two clinical sites in Australia are now open for recruitment and three sites in South Africa will be open in the next week. This trial was 50% recruited in 2022, but then paused over the summer months.

Larvotto Resources (ASX:LRV)
Larvotto announced maiden total rare earth element oxide (TREO) results from aircore drilling at its Merivale South prospect in WA. Initial drill results have produced very encouraging results, with multiple wide, near surface intersections of TREO including: 6m @ 3140ppm TREO from 18m, with 17.33% combined NdPr and 2.93% Dy.

Select Harvests (ASX:SHV)
SHV says the 2023 crop harvest activity commenced in mid-February, with initial product being delivered to the Carina West Processing Facility in late February. Data indicates the volume of the Nonpareil almond variety is potentially 25-35% lower than initially forecast. CEO David Surveyor said “the quality of the 2022 crop was the worst the company has experienced over the last 10 years.”

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