• The ASX will open higher on Monday after a 2pc fall last week
  • US jobs data were weak, but won’t stop the Fed from hiking rates this month
  • Global fundies shift to healthcare and bank stocks

 

The ASX 200 index will open higher on Monday after a 2% hit last week. At 8am AEST, the ASX 200 index futures was pointing up by +0.4%.

On Friday, the S&P 500 closed -0.29% and Nasdaq -0.2% lower after the US jobs data erased bigger losses earlier.

A softer non-farm payrolls report (+209k jobs gain vs +230k forecast) won’t do anything to alter the outlook for another interest rate hike at the 26 July FOMC meeting, says analysts at ING.

“The payrolls data took some of the heat out of rate hike expectations, but 209k jobs is still a lot and with wages staying elevated and unemployment moving lower it should solidify the case for a July rate hike,” said ING’s note.

To stock news, Levi Strauss & Co shares fell 8% after the denim maker cut its profit forecast.

Alibaba’s shares on the NYSE gained 8% after Chinese authorities said they will impose a US$984 million fine on Ant Group, an entity owned 33% by Alibaba. Investors seem to be satisfied that the fines have marked the end of a regulatory crackdown that began back in November 2020.

The best Wall Street stock mover was electric vehicles maker Rivian, which rose more than 14% after reporting better than expected vehicles deliveries in the quarter.

 

Global fundies pivot to risk-on play

As the earnings season looms, data collected by Reuters show that global fundies have increased their allocations to US healthcare and banks stocks by about 5% in June.

The data also shows fundies reducing their positions on recession plays such as cash and consumer staples companies.

The biggest asset manager in the world, BlackRock, as well as Wells Fargo, have highlighted healthcare as their favoured sector in their recent outlooks.

Meanwhile, Goldman has also upgraded its economic outlook, cutting the probability of a recession within the next 12 months to 25% from 35%.

Analysts are now turning their attention to inflation data slated for Wednesday July 12 (US time) to further clarify the path of future Fed policy.

 

In other markets …

Crude oil prices climbed by almost 3% on Friday to a nine-week high, with WTI trading at US$73.61 a barrel.

“OPEC+ production cuts are expected to tighten the market, driving supply deficits in the second half of 2023, supporting higher oil prices,” said analysts at Morningstar.

Gold price meanwhile gained around 1%, and is trading at US$1,928.21 an ounce.

Despite the gains, the gold market is yet to prove that its bearish downtrend is over, and this week’s June inflation report could be a potential trigger for another selloff, says analysts.

Bitcoin was down -0.3% in the last 24 hours to US$30,130.

On the technical chart, BTC’s price has repeatedly tested the $30k level since breaking above it recently. Some chartists say that if US$30k is broken, $28K and $26K will act as significant support levels.

 

5 ASX small caps to watch today

Activeport Group (ASX:ATV)
Activeport and Radian Arc have expanded their relationship that will accelerate artificial intelligence (AI) deployment within the telecommunications industry. The collaboration aims to leverage Radian Arc’s AMD-based GPU platform, already installed in a rapidly expanding network of 50+ telco customers worldwide, to offer GPU-as-a-Service (GaaS) for AI. This will enable telcos and their enterprise customers to easily deploy AI models within their networks, resulting in unique low-latency AI solutions.

Southern Hemisphere Mining (ASX:SUH)
SUH has submitted an application for the Lago Lithium Exploration Project located in the renowned lithium-rich Atacama region of Chile. The Salar de Atacama is widely recognised for its exceptional lithium deposits operated by the world’s largest lithium brine producers, SQM and Albemarle. The Lago Lithium Project includes nine new concessions and covers an area of approximately 27km2.

iTech Minerals (ASX:ITM)
Significant graphite assays from the second traverse at Central Lacroma include: LARC23-028 – 24m @ 8.9% TGC from 20m incl 6m @ 13.1% TGC from 38m, and LARC23-029 – 7m @ 9.9% TGC from 52m. Mineralisation at this location extends ~300m across strike, from ~20m below surface to >150m deep.

Strandline Resources (ASX:STA)
Strandline announced it has completed a seventh shipment of Heavy Mineral Concentrate (HMC), while also commencing the next commissioning campaign of the downstream Mineral Separation Plant (MSP). The MSP is designed to separate the HMC into valuable critical minerals of zircon, titanium (rutile and ilmenite), as well as a zircon in concentrate product (ZIC) containing monazite rare earths.

NextEd Group (ASX:NXD)
The tertiary education provider has reported record revenues of between $102m and $103m for FY23, 118% to 120% higher than the prior year. The company also reported record EBITDA of between $17.7 million and $18.2 million, a 392% to 406% increase from the prior year.

 

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