Market Highlights: ASX to lift on the back of Nasdaq rally; and 5 small caps to watch today

ASX to lift on the back of Nasdaq rally
US stocks rose on Friday as big techs reported solid results
The US PCE Index however came in stronger than expected

Aussie shares are poised to open higher on Monday on the back of a Nasdaq rally. At 8am AEST, the ASX200 futures contract was pointing up by +0.3%.

On Friday, the S&P 500 rose by +1.02%, the blue chips Dow Jones index was up by +0.4%, and the tech-heavy Nasdaq surged by 2.03%.

US tech stocks rallied as strong earnings from Microsoft and Alphabet showed that the new era of AI is still in full swing.

Microsoft for instance said that 7% of its 31% growth in its Azure unit was from AI. Google on the other hand reported cloud revenue of US$9.6 billion, and declared the “Gemini era” (its AI model) was well underway.

Snapchat rocketed +27% after reporting a “massive” Q1 earnings that easily topped expectations.

Tesla was down -1% as CEO Elon Musk made an unannounced visit to China, meeting with Chinese premier Li Qiang. Reports said that Musk is looking to seek approval in China for Tesla’s driver-assistance software, the Full Self-Driving (FSD).

Meanwhile, there was another hot reading on US core personal consumption expenditures (PCE), the Fed’s preferred measure of inflation, reinforcing the idea that any near-term Fed rate cuts are less likely. The PCE increased by 0.3% in March from February.

“…As it stands, there’s a considerable risk that the Fed will not feel comfortable about cutting rates before 2025,” said Nigel Green of deVere Group.

“With there being a real possibility of no rate cuts this year, investors might need to adjust their portfolios to adapt to the higher-for-longer environment to mitigate risk and to seize the opportunities,” Green added.

Why the Fed Reserve prefers PCE over CPI

It’s well understood that the Fed Reserve favours the personal consumption expenditures (PCE) price index over the better-known consumer price index (CPI).

This is because the PCE index tries to account for changes in how people shop when inflation jumps.

For example, if beef prices rise significantly, families may instead buy chicken and the PCE index captures that.

This means that as people’s spending habits change, the weights assigned to different goods and services are updated, reflecting current consumption patterns more accurately.

The CPI, on the other hand, uses a fixed basket of goods and services with fixed weights, which may not reflect changes in consumer behaviour as effectively.

“That fixed basket doesn’t allow consumers to substitute away from goods and services whose prices are rising,” said Julie Smith, an economics professor at Lafayette College.
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“So it can overstate the actual rate of inflation in the economy.”

In other markets …

Gold price fell by -0.1% to US$2,335.11 an ounce.

Oil prices also fell around -0.3%, with Brent crude now trading at US$89.07 a barrel.

The benchmark 10-year US Treasury yield was down 4 basis points (bond prices higher) at 4.67%.

The Aussie dollar climbed further by +0.25% to US65.40 cents.

Bitcoin meanwhile was flat in the last 24 hours at US$63,199.

5 ASX small caps to watch today

Buxton Resources (ASX:BUX)
Buxton announced that clearances have been received from recent Aboriginal Heritage surveying at Buxton’s 100% owned Graphite Bull Project, allowing for recommencement of drilling in Q2 CY24. The new clearances allow, amongst others, infill drilling along 2.1km of prospective strike where scout drilling has confirmed the presence of high-grade graphite mineralisation.

NGX (ASX:NGX)
NGX has successfully produced Spheronised Purified Graphite (SPG) for Active Anode Material (AAM) samples for use in lithium-ion batteries. The commercial-scale shaping testwork has achieved these solid preliminary results: Sizing (D50) of 16.7μm, Tap Density of 0.985, and a BET specific surface area of 7.3m2/g at a yield of 43%. Purification performed in a large-scale pilot plant achieved 99.98% TGC (Titration Gas Chromatography), significantly above the industry minimum of 99.95%.

Evolution Energy Minerals (ASX:EV1)
EV1 announced that its technology partner and strategic shareholder BTR New Material (BTR) has received positive performance results from battery anode and lithium-ion battery testwork conducted on bulk Chilalo samples. The testwork is further progress beyond the due diligence conducted by BTR prior to its commitment to the binding offtake agreement and investment in Evolution, where it produced a high quality spheronised graphite precursor product with competitive yields.

Respiri (ASX:RSH)
The eHealth SaaS company announced that it has entered into a three-year contract with Hawaii Independent Physician Association (HIPA), Hawaii’s largest association of independent physicians, to deliver remote patient monitoring (RPM) services to high-risk patients across all chronic conditions managed by HIPA. The initial phase of the contract will see 200+ patients commenced on the program, which will generate approximately US$310,000 in annualised reimbursement revenues.

Boom Logistics (ASX: BOL)
The total lifting solutions company reported quarterly revenue of $60.2 million, and YTD revenue of $189.8 million, up 28% on same period last year. Boom has reiterated guidance for FY24 revenue of c.$240 million and over $6 million in Operating NPAT.