• ASX to open lower on Tuesday after a mixed session on Wall Street
  • Bond volatility spiked as Middle East war intensifies
  • Bitcoin jumped to over US$31k


Aussie shares are poised to open lower again after a mixed session on Wall Street overnight. At 8am AEST, the ASX 200 index futures was pointing down by -0.2%.

In New York, the S&P 500 fell by -0.17%, the blue chips Dow Jones index was down by -0.58%, but the tech-heavy Nasdaq climbed by +0.27%.

Bond market volatility spiked as Israeli tanks rolled into Gaza. The 10-year treasury yield moved up to a 16-year high of 5.02%, before ending the day 7bp lower at 4.85%.

To stock news, ARM popped 5% after Reuters reported the company has forged a new partnership with Nvidia to design CPUs that would operate Microsoft’s Windows on Arm’s chips. Nvidia’s stock price jumped 4%.

Cybersecurity stock Okta tumbled another -8% following Friday’s news of a security breach. Citibank has added Okta to its “negative catalyst watch”.

Meanwhile, the United Auto Workers extended their strike against the Big Three Detroit automakers, with 6,800 workers walking out at the Stellantis’ Sterling Heights Assembly Plant in Detroit. Most auto stocks dropped.

Bitcoin surged by 5.5% in the last 24 hours to trade at US$31,500.

“It is good to see interest-sensitive assets like gold gaining upward momentum, as this suggests a strong recovery for Bitcoin’s price, which leads to price movements in the digital market as a whole,” said Rania Gule of XS.com in a note.

Back home, RBA governor Michele Bullock is set to give her maiden speech as governor tonight at 7pm AEDT.


What a record 10-year yield means for investments

The yield on the US 10-year bond touched 5% for the first time since 2007. The rate has risen rapidly from just 3.5% in April this year.

As the 10-year Treasury bond is seen as one of the safest investments on the planet, its swift fall (bond prices fall as yields rise) affects prices for all kinds of other investments too.

For example, it impacts Big Tech stocks and cryptos significantly, and is the major reason the S&P 500 has dropped by 10% since July.

Non-tech stocks are also impacted because their borrowing costs rise as yields rise.

Higher bond yields also increase the value of the USD, which has a negative impact on the rest of the world because most commodities like oil and gas are priced in USD – pushing inflation higher.

“When the 10-year yield goes up, it will have a knock-on effect for almost everything,” said Brett House, economics professor at Columbia Business School.


In other markets …

Oil prices eased further by more than 2%, with Brent now trading at US90.38 a barrel.

Gold price also eased, down 0.8% to trade at US$1,965.05 an ounce.

Iron ore futures slipped by -0.2% to US$118.45 a tonne.

Base metals prices were mixed, with 3-month nickel futures rising by +0.37%, and copper futures slipping by -0.56%,

The Aussie dollar jumped higher by 0.4% to US63.39.


5 ASX small caps to watch today

Zip Co (ASX:ZIP)
Zip continued its momentum and achieved positive cash EBTDA as a Group for Q1 FY24. Transaction volume for the quarter was $2.3b, up 11% YoY. Group quarterly revenue was $204.4m, up 31.9% YoY. Revenue margin improved to 8.9%, vs 7.5% in the last quarter. Zip now expects to achieve a positive Group cash EBTDA result for the full year of FY24.

Southern Cross Electrical Engineering (ASX:SXE)
SXE announced that its Heyday, SCEE Electrical and Trivantage businesses have received a range of awards across various sectors in New South Wales, Western Australia and New Zealand totalling over $50m. The company also announced that Derek Parkin OAM will retire as chairman. Karl Paganin, who has been an independent non-executive director of SXE since 2015, has been appointed new chairman, effective immediately.

Bubs Australia (ASX:BUB)
Q1 group gross revenue was $24.3m, up 21.7% on the last quarter, and up 3.4% on the pcp. Bubs says USA market expansion remains its long-term strategic priority. The company has $21.6 million in total cash and cash equivalents, plus $8m in undrawn debt facilities available as at 30 September.

Pioneer Lithium (ASX:PLN)
Maiden exploration program has uncovered spodumene-bearing pegmatite at the Red Squirrel prospect in the Central Corridor, adjacent to Green Technology Metals’ (ASX: GT1) Root Bay pegmatite system. Mineralised pegmatite outcrops typically display fractionation indicators and accessory minerals associated with LCT (Lithium-Caesium-Tantalum) pegmatites, and visible spodumene concentrations up to 5%.

Aurelia Metals (ASX:AMI)
Aurelia advised that it has been granted the Mining Lease for its Federation Project by the Government of New South Wales. The Mining Lease (ML 1862) covers 3,885 hectares and has been granted for a term of 21 years. It encompasses the Federation deposit and proposed mining areas.


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