Market Highlights: ASX to fall; debt ceiling vote passed but traders fear it may cause a recession

The ASX is set to open lower on Thursday
US debt ceiling deal passed to Senate after the House voted 241-187
Crude prices have fallen by another -2.7%

Aussie shares are set to open lower on Thursday after the shock inflation report yesterday lifted interest rate bets. At 8am AEST, the ASX 200 index futures was pointing down by -0.2%.

Overnight, Wall Street also finished lower on concerns the debt deal and more Fed tightening could push the US economy into a recession. Both the S&P 500 and tech heavy Nasdaq fell by -0.6%.

On the debt ceiling deal, the House has voted 241-187 and advanced the bill to the Senate. Experts believe the bill will pass despite a revolt among a handful of hard-line Republicans.

Meanwhile the US JOLTS jobs data came in strong, with job openings at 10.1 million, well above the consensus estimate of 9.4 million. The data has increased the chances of more Fed rate hikes.

“Market calls that the Fed is done hiking won’t be able to shake off this labor market strength,” said Oanda analyst, Edward Moya.

In Australia, a shock inflation report yesterday has also lifted bets the RBA would hike the cash rate further.

Australia’s headline inflation came in at 6.8% for April, up from 6.3% the month before.

“This data today shows that inflation locally is stubborn, and another hike from the RBA next week seems to very much be on the table,” said Josh Gilbert, market analyst at eToro.

Now read: This new CPI read is nuts: Inflation’s ‘clearly peaked’. Risk of more hikes ‘now very high’. Probs ‘soon as next week

Stock moves

To stock news, US auto company Advance Auto Parts Inc plunged 35% after cutting its full year forecasts. Shares of other autoparts companies also fell around -5%.

Nvidia Corp’s shares finally fell after two weeks of rallies that sent its market cap close to US$1 trillion. The share price tumbled by -5.5% overnight.

Hewlett Packard also slipped -6% as it missed Wall Street estimates for Q2 revenue.

Meanwhile Tesla plans to give an early glimpse of its revamped Model 3 sedan in Shanghai, as Elon Musk visited the city.

The updated Model 3 is reportedly Tesla’s first mass-market sedan, with a sportier look than the earlier version.

In other markets

Crude prices have fallen by another -2.7%, with WTI now trading at US$67.62.

This follows disappointing PMI readings from China, and on expectations that OPEC+ won’t be delivering more production cuts at this weekend’s meeting.

Gold rose +0.25% to US$1,964.13 an ounce.

“A debt deal is not necessarily bad news for gold,” said Moya.

He believes a recession caused by the debt deal could trigger an inflow into bullion.

“The details behind the proposed piece of legislation includes significantly lower spending, which will be a major blow to the economic outlook and likely trigger a much harder hitting recession.”

Bitcoin meanwhile fell -2% in the last 24 hours to US$27,148.

5 ASX small caps to watch today

Paradigm Biopharma (ASX:PAR)
Paradigm said its iPPS drug demonstrates durable effects on pain, function and cartilage volume in a canine osteoarthritis model. The 26-week timepoint in the canine model is equivalent to approximately three years in humans, highlighting the durability of positive iPPS treatment effects on osteoarthritis pain, joint structure and function. iPPS was shown to stabilise disease progression at week 8 and week 26 in osteoarthritic dogs.

Lynch Group (ASX:LGL)
The wholesale flowers and potted plants company says that full year FY23 group EBITDA will be in the range of $42m – $43m (previous guidance $36m – $40m). This comes after key Mother’s Day events in Australia and China convinced the company that consumer demand for floral products remains strong.

Acusensus (ASX:ACE)
The AI-focused road safety solutions company said its North American subsidiary has signed a deal with the North Carolina government for services relating to the detection and capture of distracted driving and failure to wear seatbelt. The deal has an estimated value of $0.5m for a one year term.

Tinybeans Group (ASX:TNY)
Tinybeans announced the appointment of Zsofi Paterson as its new CEO effective 17 July. Paterson was the CEO of Loup, a portfolio of digital health & wellness subscription products including ‘Centr, by Chris Hemsworth’. She has a strong track record in building and leading high performing teams to drive revenue, earnings and brand growth in Australia and the US.

Infinity Mining (ASX:IMI)
Assay results received from 37-hole reverse circulation (RC) drilling program completed in March at 100%-owned projects in Central Goldfields WA include: 8m @ 3.46g/t Au, from 56m depth in hole VB23RC0010, including 1m @ 21.86g/t Au, from 57m depth.