Market Highlights: BoE ditches buyback, RBA speech, and 5 ASX small caps to watch on Wednesday

The ASX will open lower on Wednesday
US and European shares generally fell as the BoE announced the ending of its stimulus program
RBA assistant governor to speak today

Local shares are set to open lower on Wednesday. At 8am AEST, the ASX 200 October futures contract was pointing down by 0.30%.

Overnight, Wall Street was back from holidays and remained unsettled ahead of the US inflation report due on Thursday (US time).

The S&P 500 fell 0.65% and the Nasdaq by 1.1%, while the Dow Jones inched higher by 0.12%.

Stocks in US and Europe were mainly pulled lower as the Bank of England (BoE) announced it will end its emergency intervention in the UK bond market by Friday.

BoE governor Andrew Bailey said he did not expect the bank’s £65bn gilts purchasing programme to extend beyond this week.

Yields on long term bonds jumped on the news (bond prices lower), with the US 30-year yield rising 12 basis points to 3.96%, the highest in nine years.

Meanwhile, the International Monetary Fund (IMF) predicted a lacklustre 1.6% growth in the US economy this year.

The IMF also told central banks around the world to “stay the course” in their fight against inflation, despite warning that a third of the global economy will slip into a recession next year.

In other news, Bank of Cleveland Fed President Loretta Mester said the Fed had yet to get inflation under control despite aggressive rate hikes in the last few months.

“Given the current level of inflation, its broad-based nature, and its persistence, I believe monetary policy will need to become more restrictive in order to put inflation on a sustainable downward path to 2%,” she said.

Her comments came ahead of tomorrow’s release of the US Fed minutes from its last meeting.

Global oil prices fell by around 2% on Tuesday on global recession fears with the WTI crude trading at US$89.35 a barrel.

“WTI crude will likely use the $90 level as the centred line for the demand and supply side to play tug-of-war,” said OANDA analyst Edward Moya.

“Despite all the short-term growth fears, oil’s downside should be limited. It would take the worst-case scenario for global stagflation for crude prices to return to the September lows.”

Bitcoin meanwhile was down 1% in the last 24 hours to trade at US$19,024.

Brian Gould at Capital.com says that Aussie bitcoin traders who entered Bitcoin at current levels in mid-June have actually made a 10% return in four months, should they choose to cash in their coins and convert the US dollar proceeds back to Australian dollars.

The Aussie dollar has plunged to its lowest point in 2.5 years to 62.71c, gripped by the fears of a global recession.

Looking at ahead to today’s trading session on the ASX, RBA assistant governor Luci Ellis will speak at 9am in a speech titled: “The neutral rate: the pole-star casts faint light”.

5 ASX small caps to watch today

Propel Funerals (ASX:PFP)
Propel gave a trading update for Q3 with revenue hitting ~$44 million, up ~33% on the pcp. For the quarter, the company achieved Operating EBITDA of ~$13 million, up ~40% on the pcp and reflecting a margin of ~30% (pcp: ~28%).

St George Mining (ASX:SGQ)
High-grade lithium has been confirmed in rock chip samples as ongoing field mapping identifies a significant extension of the outcropping pegmatites containing visible lithium minerals. High-grade assays for rock chip samples from Mt Alexander include: 1.97% Li2O, 715ppm Cs, 166ppm Ta2O5 and 13,765ppm Rb.

Discovery Alaska (ASX:DAF)
Broad lithium mineralisation zones have been confirmed from core sampling and analysis results of initial priority drill holes. Significant intercepts include: 16m @ 0.19% Li2O from 126.5m and 10.97m @ 0.18% Li2O from 84.7m.

Frontier Energy (ASX:FHE)
FHE announced the appointment of a highly experienced gas and power specialist, Equity Lifting Solutions (ELS), to assist FHE in offtake negotiations for Stage One green hydrogen production from the company’s Bristol Springs Project. ELS’s highly regarded team has been instrumental in some of WA’s largest energy offtake negotiations.

Summit Minerals (ASX:SUM)
Summit announced that it has executed Land Access Agreements with two parties in the southeast of the Windfall Antimony Project, near Kempsey, NSW. The properties include workings from the Munga Creek camp, which was last operational in 1974, producing over 1100t of antimony concentrates. The agreements provide certainty for Summit’s exploration ambitions, aimed at discovering brownfields antimony resources within several historical antimony camps captured by the Project.