• The ASX is set to open flat after a half-per cent dip on Wall Street
  • Banking turmoil fears are back to haunt markets as Deutsche Bank sold off
  • Bloomberg Economics sees a 75% chance of a US recession in Q3

 

The ASX is set to open flat on Monday after a half a per cent rise in New York on Friday.

US stocks reversed direction late in the day after a selloff in Europe that left Deutsche Bank shares closing 8.5% lower.

Banking contagion fears remain heightened with concerns that Deutsche Bank (DB) could be the next Credit Suisse.

Some analysts were however surprised that DB was taking the brunt of the market’s ire.

“The market is on edge. It seems to just be looking for targets,” said Tatjana Greil Castro, a portfolio manager at Muzinich & Co.

Other European banks – Societe Generale, Credit Agricole and BNP Paribas – also declined but the large US banks were down only modestly.

According to the Fed H.8 report published on Friday, deposits at small banks in the US slumped US$120 billion, while those for 25 largest banks rose almost US$67 billion as depositors moved money from regional to large banks.

Shares of Silvergate Capital rose 52% after reported rumours the failed crypto friendly bank may be able to sell some of its technology assets like the Diem stablecoin technology at reasonable prices.

Block Inc, which was the subject of the short seller Hindenburg report, was down another 2% on Friday.

German brewery Klosterbrauerei Neuzelle meanwhile said it created the world’s first powdered beer, by simply just adding a couple of spoons into a glass of water and giving it a stir.

 

Recession in Q3?

Bond investors are piling into bets that a US recession is around the corner, as the US 2-year vs 10-year spread gets wider.

Bloomberg Economics sees a 75% chance of a US recession in Q3, and predicts that US unemployment will climb to 5% in 2024 from 3.6% today.

Crude prices were 1% lower  after US Energy Secretary Granholm said refilling the SPR (strategic reserves) could take years.

“There just isn’t a lot of optimism here for the outlook over the short-term for crude oil, and that has energy traders hesitant to buy this dip,” said Oanda analyst Edward Moya.

NOW READ: The ASX players in the best position to help Europe meet its critical minerals shortfall

Gold was also down by 0.75% to US$1,978.57 after some hawkish comments from Fed’s Bullard, who revised his terminal dot plot rate to 5.625%.

“This means he is pretty confident that the Fed is nowhere near done tightening,” said Moya.

 

Bitcoin was up over 1% in the last 24 hours to US$28,822.

Crypto exchange Coinbase plunged 20% on Thursday after the SEC said it was going to act against some parts of the business, but regained 2% on Friday.

 

5 ASX small caps to watch today

Nitro Software (ASX:NTO)
Nitro bidder Potentia has now obtained a stake in Nitro greater than 75%. As a consequence, the cash consideration under the Potentia takeover offer has been increased from $2.17 to $2.20. The Nitro Board continues to recommend that any Nitro shareholders who have not already done so promptly accept the All-Cash Consideration of $2.20.

Lord Resources (ASX:LRD)
Lord is set to acquire two exploration licences in WA’s “Lithium Super-Province”. The project area is prospective for lithium mineralisation with tenements exhibiting subcropping pegmatites, with elevated tantalum (Ta) in rock samples and elemental ratios considered prospective for LCT-type pegmatites. The geological setting is within the ‘Goldilocks Zone’ for LCT deposits – greenstone lithologies within 5km of granitic intrusions.

RLF AgTech (ASX:RLF)
RLF has appointed Carbon West to support the establishment and compliance management of RLF’s commercial soil carbon farming pilot program. Carbon West will work to have the pilot program registered with the Clean Energy Regulator Emission Reduction Fund for the purpose of earning ACCUs. The 5,000ha pilot program consists of commercial farming locations where the company is in discussions with farm owners to enter into agreements for the registration of ERF carbon projects using RLF AgTech’s Accumulating Carbon in Soil System (ACSS).

Metals Australia (ASX:MLS)
Multiple lithium pegmatite targets have been identified by Metals Australia on the company’s tenements directly adjoining Patriot Battery Metals’ (ASX:PMT) Corvette Lithium Project in Canada. Large, potentially lithium bearing, pegmatites have been mapped within the company’s tenements immediately along strike from lithium-pegmatite clusters identified by Patriot. Satellite data has confirmed a similar spectral pattern to Patriot’s high-grade CV lithium pegmatites along strike.

92 Energy (ASX:92E)
The Gemini winter 2023 drilling campaign has now been completed with 16 drillholes completed totalling 4,295m of a planned 4,000m. Significant uranium mineralisation has been intersected including: 3.8m averaging 1.3% eU3O8 including a sub-interval of 6.0% eU3O8 over 0.5m.

 

At Stockhead we tell it like it is. While RLF AgTech is a Stockhead advertiser, it did not sponsor this article.

 

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