• ASX to drop much lower today after a selloff in US and Europe
  • Chipmaker Nvidia jumped 25% to all time high
  • Crude prices rose 2%, while gold retreated 1%


Aussie shares are set to open lower this morning after US and European stocks sold off heavily overnight. At 8am AEST, the ASX 200 index was pointing down by -0.6%.

Overnight, Wall Street got hit with a one-two punch of concerns over the debt default, and fears sticky inflation might not allow the Fed to pause its tightening cycle.

The FOMC minutes revealed that if inflation ends up being stickier than economists are expecting, the FOMC board could very well skip a June meeting, but follow through with one at the July meeting.

All major US indexes fell around -0,7%, while shares in Europe were also rattled after a shock UK inflation report.

The UK CPI has come down from 10.1% to 8.7%, but it was much higher than the 8.2% economists had expected.

Meanwhile, US Treasury Secretary Yellen has warned once again the US could be running out of cash to pay its bill by as early as June 1.

She also said we’re already seeing the beginnings of the potential market stress, and it will only get worse if the US was to default. JP Morgan has put the likelihood of default at 25%.

NOW READ: 4 US debt ceiling scenarios you can sing to, including the one where the S&P500 crashes 30pc

To stock news, chipmaker Nvidia soared by 25% after the bell to an all time high.

Its shares soared after saying that sales for three months ending July will be US$11 billion, shattering analysts’ forecast of around US$7 billion.

The company is benefiting from the AI frenzy, and has positioned itself as the top provider of chips required for machine learning and AI.


In other markets …

Crude prices jumped another 2% overnight, with WTI now trading at US$74.20 a barrel.

“Oil is starting to turn bullish as demand shows signs of improvement, and energy traders heeding the Saudi warning given to short-sellers,” said Oanda analyst, Edward Moya.

Gold retreated 1% to US$1,957.45 an ounce.

Short-dated Treasury yields are surging and that has dominated last night’s price action.

Bitcoin meanwhile plunged 3% in the last 24 hours to US$26,352.

Analysts believe Bitcoin and other cryptos are going to be very sensitive to surging yields, as too many crypto/blockchain projects will struggle with financing.


 5 ASX small caps to watch today

Fonterra (ASX:FSF)
Fonterra announced an opening 2023/24 season forecast Farmgate Milk Price of $7.25 to $8.75 per kgMS, with a midpoint of $8.00 per kgMS. The company says this reflects an expectation that China’s demand for whole milk powder will lift over the medium-term. Fonterra also reported a profit after tax of $1,326 million for Q3, and lifted its FY23 full year forecast earnings to 65-80 cents per share from 55-75 cents per share.

Volpara Health (ASX:VHT)
The breast imaging specialist reported a 20% YoY increase in full year profits to US$20.9m. Gross margin is maintained at 92.5% and said its customer base is diversified, with the top 10 customers only making up 18% of its annual recurring revenue.

The tech-driven plant nutrition company announced that it has entered into an agreement with Kona, one of Vietnam’s leading distributors of agricultural products, valued at $3.3 million over five years. The agreement will provide RLF Agtech with access to Kona’s 400+ distribution network in Vietnam, allowing the company to reach a much larger customer base and further penetrate the market.

Pacific Edge (ASX:PEB)
The cancer diagnostics company said its annual operating revenue increased 71% to $19.6 million for the full year. Total revenue increased 88% to $26.1 million lifted by a 39% rise in commercial test volumes and favourable currency movements.

Prospect Resources (ASX:PSC)
Stage 2 diamond drilling at Step Aside Project has generated significant extensional intersections of high-grade lithium mineralisation across multiple targeted pegmatites. Best results returned include: 6.28m @ 1.09% Li2O from 67.52m, and 5.96m @ 1.08% Li2O from 100.27m.