Market highlights from Wall St and 5 ASX small caps to watch on Monday 31 Oct. Picture Getty
Market Highlights: ASX to rise as Fed, RBA headline a big week for central banks
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- The ASX is set to track Wall St higher on Monday
- On Friday, Wall St had a big rally with tech stocks leading the way
- It’s a big week as the Fed, RBA and BoE are expected to make their rate calls, not to mention the Melbourne Cup
Aussie shares are set to open higher on Monday, tracking gains on Wall St. At 8am AEST, the ASX 200 Dec futures contract was pointing up by 1.4%.
On Friday, Tech led a big rally in New York as all three major US indices finished around 2.5% higher.
Intel Corp (up 11%) and Apple (up 7.5%) led the Tech charge despite economics data showing that pricing pressures are not slowing fast enough to justify a less aggressive Fed rate hike this week.
Both the US Employment Cost Index (ECI) and the core PCE inflation data released still showed strong numbers ahead of a big week for central banks.
On Tuesday, the RBA and US Fed are scheduled to make their call on rates while the Bank of England will make its call on Thursday.
The consensus is for the Fed to hike by 75bp again, while the RBA is tipped to raise its cash rate by 50bp (from 25bp last month) just half an hour before Tuesday’s Melbourne Cup.
Economists say the RBA will be forced to make that call after the surprising September quarter CPI that rose to a 32-year high of 7.3%.
According to RateCity, a 50bp rise would add about $30 more in monthly mortgage repayments for every $100,000 borrowed.
A big week for the global #economy and #markets with:#Fed and @BankOfEngland policy meetings (75 bps hike expected for both);#BoJ minutes;
US JOLTS and #jobs report; and
Europe Q-3 GDP.
Also, keep an eye on grain prices following #Russia's withdrawal from the shipping agreement— Mohamed A. El-Erian (@elerianm) October 30, 2022
In other markets, spot gold slipped 1% to US$1,644 an ounce.
“Gold could be on the verge of a major breakout if the FOMC decision is supported by the non-farm payroll report at the end of the week,” said OANDA analyst Edward Moya.
Oil markets remained volatile as China ramps up COVID restrictions, and with some US oil giants signalling modest commitments to boost production.
US-based Exxon is the latest oil company to have smashed record earnings, with its Q3 profit nearly matching Apple’s.
Exxon smashed forecasts out of the park with its US$19.7b profit for the third quarter, pushing its share price up 3% on Friday.
The benchmark Brent crude was down 1% to US$95.77 a barrel, trimming its 10% increase in the month of October.
“A dovish rate rise (by the Fed) could allow for dollar weakness, which could keep oil prices supported here,” said Moya.
Meanwhile Bitcoin is down half a per cent to US$20,702 at 8.30am AEST.
The focus for cryptos this week will be on the Hong Kong Fintech event which includes an appearance from FTX’s Sam Bankman-Fried, while Binance CEO Zhao Changpeng and Ark’s Cathie Wood will speak at the Web Summit in Lisbon.
Looking ahead to today: retail trade for September, Melbourne Institute inflation gauge for October, and private sector credit for September data will all be released.
5 ASX small caps to watch today
Bubs Australia (ASX:BUB)
Bubs’ Q1 group gross revenue was $23.6m, up 28% on pcp. Bubs has achieved record market share in Australian retail with 56% of the total goat formula category. In the US, Bubs has gained 0.40% of US market share and 9% of organic category within the first 13 weeks of entering the market.
Sezzle (ASX:SZL)
BNPL play Sezzle reported a 6.8% increase in total income (on pcp) to $30.4m. Active consumers increased by 0.4% while active merchants rose by 2.9%. However Sezzle reported a bottom line adjusted EBITDA loss of -$3.45m.
Schrole Group (ASX:SCL)
The edtech company has been engaged by Rio Tinto to assess capabilities and governance of selected universities and vocational education schools in Guinea. An invoice of around US$225k has been issued as part of the engagement commencing this month.
Nitro Software (ASX:NTO)
Nitro has given an update regarding a takeover bid received from Technology Growth Capital on October 28 for $1.80 a share. The Board has decided that the offer undervalues Nitro, and unanimously rejected it as not being in the best interests of shareholders.
Red Mountain (ASX:RMX)
Red Mountain has secured a footprint in Bynoe Lithium Province in the NT. The two prospective tenement applications are adjacent to Core Lithium’s Finniss Lithium Project and Lithium Plus Minerals’ Bynoe Lithium Project. The tenures lie within the same geological setting as these neighbouring projects.
