• ASX to open more than 1pc higher this morning
  • Wall Street rose after strong retail sales data and Arm Holdings IPO debut
  • We look at why gold price has been declining


Australian shares are set to open much higher on Friday after a strong rally on Wall Street overnight. At 8am AEST, the ASX 200 index futures was pointing up by +1.2%.

In New York, the S&P 500 rose by +0.84%, blue chips Dow Jones up by +0.96%, and tech heavy Nasdaq by +0.81%.

Stocks rose broadly after US retail sales increased more than expected by 0.6% in August, which points to the resilience of US consumers despite rising interest rates.

The US Producer Price Index meanwhile increased 0.7% in August, indicating stubborn inflation.

Arm Holdings’ highly-anticipated trading debut on Nasdaq got off to a good start, with the chip design company soaring by 25% to close at US$63.59.

At a US$60 billion valuation, Arm’s PE (price to earnings) multiple is trading around 110x, which is comparable to Nvidia’s valuation at 108x.

Other chipmakers like Micron Technology and Broadcom also added between 1-2% last night.

EV maker Nikola surged more than 32% after the company announced plans to sell its hydrogen fuel-cell trucks later in September.

Online used car retailer Carvana also surged 13.5% as investors turned bullish on used cars in anticipation of the the looming UAW workers’ strike which analysts say could be the ‘biggest auto strike in generations’.

Over the Atlantic, the European Central Bank (ECB) raised its benchmark policy rates by 25bp.


Why has the gold price been declining?

Gold price has been declining in recent weeks; this week, it’s fallen by another half a per cent to US$1,910.22 an ounce.

Investors typically buy gold as a hedge against inflation, and when the US CPI came in hotter than expected this week, gold should have risen.

So why has gold been falling instead?

Most analysts believe that a series of strong data coming out of the US in recent weeks will encourage the Fed to hike rates in November to tame sticky inflation.

That has sent bond yields soaring lately, which has hurt the price of gold because gold doesn’t pay any regular income like bonds.

However, there’s some good news because Goldman Sachs is predicting an average gold price of US$2,133 per ounce for 2024.

This is higher than the average consensus forecast of US$2,100 per ounce for 2024 made by other analysts.


In other markets …

US bond yields rose 3-4bp overnight as traders digested the hot US retail sales report.

Crude prices climbed +2.5% as oil hit the highest levels in 2023. Brent traded at US$94.04 a barrel.

Base metals also rose, with nickel futures jumping almost +1% and copper futures +0.25%.

Iron ore futures rose modestly to US$120.56 a tonne.

The Aussie dollar climbed +0.3% to US64.38c.

Bitcoin meanwhile rallied 1.3% in the last 24 hours to US$26,608.


5 ASX small caps to watch today

NOVONIX says it has achieved key milestones and established a pathway to profitable anode material production in the US. Highlights from recent production campaigns include: Demonstrated successful production with the company’s Generation 3 Furnaces meeting design targets; doubled production capacity target to up to 20,000 tpa for the Tennessee facility; and expected capital and operating costs for future facilities projected to be lower than initial estimates.

Lion One Metals (ASX:LLO)
LLO reported significant new high-grade gold results from ongoing grade control drilling at its 100% owned Tuvatu Alkaline Gold Project in Fiji. Highlights of new Zone 2 grade control drilling (3g/t Au cutoff include: 19.78g/t Au over 6.0m and 14.83g/t Au over 6.0m.

Basin Energy (ASX:BSN)
3D inversion of historical geophysical datasets have been completed, and the results support the exploration model for unconformity style uranium mineralisation. A five-kilometre target corridor has been defined at North Millennium located along interpreted fault extension, host of Cameco’s Millennium uranium deposit.

Castle Minerals (ASX:CDT)
Castle has commenced pegmatite evaluation at the Woodcutters Lithium Project. Field crew is now being dispatched to Woodcutters to extend previous work following-up on priority lithium soil anomalies and anomalous pegmatite rock chip result. Castle says location and geological setting of the anomalism is consistent with expectations in a typically zoned pegmatite field.

Helix Resources (ASX:HLX)
Helix says a program to test a series of prospective copper targets at the Fiveways and Quanda-Hermidale target areas has recently been completed. Whilst downhole geophysical surveys are due to be completed shortly, to date, no significant copper mineralisation was observed in the geological logging. All assays are pending.


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