• ASX top extend last week’s gains on Monday
  • Warren Buffett addressed shareholders at Berkshire Hathaway’s AGM
  • The RBA to make rates decision tomorrow, here’s a preview


Aussie shares are poised to extend last week’s gains on Monday ahead of the RBA’s rate decision tomorrow. At 8am AEST, the ASX200 futures contract was pointing up by +0.2%.

On Friday, Wall Street rallied once again after a softer-than-estimated non-farm payrolls (NFP) number.

The S&P 500 rose by +1.26%, the blue chips Dow Jones index was up by +1.18%, and the tech-heavy Nasdaq surged ahead by +1.99%.

US non-farm payrolls rose by 175k jobs in April, versus the 240k consensus in the Bloomberg survey – boosting expectations of a September Fed rate cut.

“…The market is fully discounting a 25bp September interest rate cut once again, with a second one before the end of the year,” said ING’s chief economist, James Knightley.

“The payroll miss hands the baton to the bulls,” said Jose Torres at Interactive Brokers.

To stocks, Apple surged by 6% following its announcement of sales exceeding expectations in the previous quarter, and a forecast of resurgence in growth for the current quarter.

Biopharma Amgen jumped by +11% following the CEO’s optimistic remarks about early findings from a study of the company’s potential obesity treatment, MariTide.

Berkshire Hathaway held its annual general meeting in Omaha over the weekend, as Warren Buffett made it clear that his empire will continue to be a major shareholder in Apple, even after offloading billions of dollars’ worth of shares in the tech giant.

At 93, Buffett has been gradually passing the torch to a new generation of leaders. Greg Abel, currently overseeing Berkshire’s non-insurance ventures, is poised to take the reins when he passes. Buffett said that when that happens, “the stock would go up tomorrow.”

Meanwhile, the RBA board will huddle for their first of a two-day meeting today, with a rates decision due tomorrow.

Experts are now debating whether the RBA will opt to lower or raise the cash rate next.

Currently, the cash rate stands at 4.35%, and most investors don’t expect it to go up this month. If it does, it’ll mark the 14th increase in two years and the first since November.


RBA rates decision preview

According to Emma Lawson, a fixed interest strategist at Janus Henderson, the Australian economy is slowing gently, and while no recession is forecast, the pressure of higher interest rates is expected to continue to broaden out across sectors of the economy.

“Our base case is for the RBA to remain on hold at current rates, before commencing an easing cycle in late 2024.

“We price a more modest than historically average easing cycle, of around 175bps, spread over an extended period,” Lawson said.

However Lawson says the market is pricing it slightly different at the moment.

“We see the near-term pricing hinting at a rate hike this year, and very limited cuts in 2025, as underestimating the risks to the economy after a long period of policy tightness.”


In other markets …

Gold price traded flat at US$2,302.38 an ounce.

Oil prices rose around +0.6%, with Brent crude now trading at US$83.30 a barrel.

The benchmark 10-year US Treasury yield was down 8 basis points (bond prices higher) after the NFP print, to 4.51%.

The Aussie dollar keeps climbing, surging further by +0.6% to US66.12 cents.

Bitcoin meanwhile was flat in the last 24 hours to US$63,766.


5 ASX small caps to watch today

Mandrake Resources (ASX:MAN)
Rio Tinto-backed Direct Lithium Extraction (DLE) and refining company ElectraLith have successfully produced 99.9% pure battery-grade Lithium Hydroxide from Mandrake’s 100%-owned Utah Lithium Project using its cutting-edge DLE-R process. Mandrake and ElectraLith are currently progressing a Strategic Partnership Agreement to facilitate the construction of a DLE-R pilot facility at the Utah Lithium Project.

Finder Energy (ASX:FDR)
Finder announced that it has received offer letters from the North Sea Transition Authority (NSTA), notifying that it has been successful in winning two licences in the final tranche of awards in the 33rd UK Offshore Licensing Round. The first licence is located in the Ettrick Sub-basin between Finder’s P2528 and P2527 licences, and is adjacent to the giant Buzzard and Golden Eagle oil fields. The second licence is located to the north on the South Halibut Shelf, where Finder will hold a 100% interest.

Pioneer Credit (ASX:PNC)
Pioneer advised that it is upgrading its FY24 Purchase Debt Portfolio (PDP) investment guidance from $85m to circa $95m. This represents a ~12% increase on prior investment guidance, and marks the company’s second investment upgrade in FY24. At the outset of FY24, the company forecast PDP investment of $60m.

Brightstar Resources (ASX:BTR)
A +30,000m reverse circulation (RC) and diamond drilling program will commence imminently across the Brightstar portfolio, targeting resource upgrades and extensions in conjunction with feasibility workstreams at Menzies and Laverton, as well as Linden Gold’s Second Fortune and Jasper Hills Gold Projects. The RC drilling is targeting gold mineralisation within conservative ($2,750/oz and $2,800/oz) economic pit shells and underground designs previously announced in Brightstar Scoping Studies.

MTM Critical Metals (ASX:MTM)
Flash Joule Heating (FJH) prototype testing has produced significant increases in the acid leachability of Rare Earth Elements (REE) and target Critical Metals from Coal Fly Ash (CFA) samples. CFA samples treated by the FJH prototype have delivered a +50% increase in the recovery of REE and Critical Metals.


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