• The ASX will extend its gains on Monday
  • Wall Street rose despite some disappointing earnings from major banks
  • Bitcoin back to pre-FTX level at US$20k

 

Aussie shares are set to extend its gains and rise for a fourth consecutive day. At 8am AEDT, the ASX 200 Jan futures contract was pointing up by 0.5%.

On Friday, Wall Street shook off disappointing Q4 results from major banks and lifted by around half a percent.

JPMorgan Chase, US’ largest bank, reported revenues that came in below expectations as the bank warned the risk of “mild recession” later in the year.

“We don’t know the future,” said CEO Jamie Dimon. “There are all these geopolitical uncertainties which are real, and we have our eyes focused on it. They may go away or they may not.”

JPMorgan said it will set aside more than $US1 billion to prepare for the possibility of borrowers defaulting on their loans.

Bank of America’s results topped expectations, but CEO Brian Moynihan also mentioned “mild recession” in an investors’ call after he described 2022 as “one of the best years ever for the bank”.

“Our baseline scenario contemplates a mild recession. … But we also add to that a downside scenario, and what this results in is 95% of our reserve methodology is weighted toward a recessionary environment in 2023,” he said.

Meanwhile, Citibank’s profit was a fifth smaller than a year before, and Wells Fargo suffered a huge drop in profit due to legal costs and regulatory fines.

Equity markets fell after the results were released, but then turned around when the US consumer sentiment data rose to a 9-month high to 64.6, well above all the 52.0 consensus.

In other stock news, Tesla’s woes continue as the share price dropped another 1% on Friday.

The company appears to be getting desperate as it cuts prices across models sold in the US.

“The goal is to allow car buyers to take advantage of a $7500 EV tax credit, but it will eat at margins and raise questions about how confident they are with their outlook,” said OANDA analyst Edward Moya.

Elsewhere, spot gold rose over 1% to $US1,920 an ounce while Brent crude gained another 2% to US$85.28 a barrel.

“Energy traders are starting to price in a little bit more crude demand coming out of Europe and not just China,” said Moya.

The ASX meanwhile is on track to reach an 8-month high as it looks to rise for a fourth straight day today.

Bitcoin has also surged back above US$20k, trading now at US$20,904. BTC has been rallying by over 20% in the last 7 days as it moves back to pre FTX levels.

 

5 ASX small caps to watch today

Splitit Payments (ASX:SPT)
Splitit and Alipay have formed a partnership to power the ‘Pay After Delivery’ option for shoppers on AliExpress, a global eCommerce marketplace owned by the Alibaba Group. The service will initially launch in Germany, France and Spain, with plans to expand into other international markets. It will allow merchants to give their consumers the benefit of paying for purchases after the goods are delivered.

Halo Food (ASX:HLF)
The Healthy Mummy has received an opening order from Woolworths for product to be ranged nationally. The value of the first order totals $291,000, and will be available in Woolworths stores from late January.

Baby Bunting (ASX:BBN)
The company’s top line sales rose almost 7% to $254.9m from a year before. However NPAT fell 59% to $5.1m mainly due to investments to establish new stores in the ANZ region. Looking ahead, Baby Bunting expects pro forma NPAT to be in the range of $21.5 million to $24 million; and full year gross profit margin to be between 38% to 39%.

Black Cat Syndicate (ASX:BC8)
BC8 provides an updated JORC 2012 Mineral Resource at its Coyote Central, part of the 100% owned Coyote Gold Operation in WA. Total Indicated Resources increased 105% from 150koz @ 3.8 g/t Au to 307koz @ 5.3 g/t Au. The new resource was added at a cost of $28/oz, which includes the significant upgrade of Indicated Resources.

Magnum Mining (ASX:MGU)
Lithium geochemistry anomaly has been discovered on MGU’s Buena Vista Green Pig Iron Project ground in Nevada. The discovery is the first non-iron mineralisation identified on the property, and provides the company with an opportunity to capitalise on the USA’ insatiable lithium demand with prospect close to the world’s largest lithium battery factory.

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