• The ASX will open much higher on Thursday
  • Wall Street rallied strongly overnight as yields slump following BoE’s decision
  • The BoE has surprised the market with bond buyback announcement

Local shares are set to open much higher on Thursday. At 8am AEST, the ASX 200 October futures contract was pointing up by 1.50%.

Overnight, Wall Street rallied strongly after a surprise Bank of England (BoE) intervention in the bond markets.

The BoE announced it will carry out temporary purchases of long-dated UK bonds, and postpone the start of Quantitative Tightening Gilt sales until the end of October.

The idea is to halt a crash in UK government bonds that posed a “material risk to UK financial stability” after the Chancellor announced new tax cuts earlier this week.

Bond yields in UK, Europe and the US all slumped heavily after the news was announced (bond prices much higher).

The benchmark US 10-year note plunged 22 basis points to 3.73%, while the UK’s 10-year yield tumbled 50bps.

The falling yields triggered all three major Wall Street benchmarks to rally strongly, with the S&P 500, Dow Jones and tech-heavy Nasdaq all surging by 2% each.

In stock news, Biogen’s stock price went through the roof last night, up 40%, after the biotech said that its experimental Alzheimer’s drug with Japan-based partner Eisai showed promising results.

In the Phase 3 study, Biogen’s lead drug lecanemab was shown to remove built-up plaque in the brain called beta amyloid which researchers say would lead to a cognitive benefit for patients with early-stage Alzheimer’s. Analysts have lauded the latest results to be a new dawn for Alzheimer’s treatment.

A barrage of Fed speakers gave speeches overnight.

Atlanta Fed President Raphael Bostic said he’d like to avoid overdoing rate hikes.

“I don’t think it’ll be appropriate for us to continue to tighten and increase your rates until inflation gets to 2%,” Bostic said.

San Francisco Fed President Mary Daly was also dovish, saying that it’s important the Fed “navigate through this high inflation environment as carefully as we can” so as not to cause damage to the fragile labour market.

But OANDA analyst Edward Moya said investors should not be complacent about the Fed’s next rate move.

“Some traders are growing confident that we are close to seeing the end of the Fed’s tightening cycle, but that is still too early to say,” he said.

In other markets, oil prices surged 3-4% overnight, gold was up 2% and iron ore was flat.

Bitcoin rose above US$19k again to trade at US$19,597 at 8.30am AEST.

Bloomberg Intelligence senior commodity strategist, Mike McGlone, said BTC and gold could rally by year’s end. See that story here on Coinhead.

Looking ahead to today’s trading session, the ABS will release its CPI indicator for July and August.

5 ASX small caps to watch today

Gentrack Group (ASX:GTK)
The software company released a profit guidance and said that revenues for FY22 are forecast to be around $125m (vs FY21 revenues of $105.7m) and that FY22 EBITDA is expected to be in the mid to high single digits ($’m).

Anson Resources (ASX:ASN)
New lithium-rich super saturated brines have been discovered at Cane Creek 32-1 Well at the Paradox Lithium Project in Utah. Drilling is complete and assays from the new Clastic Zones and the Mississippian units are expected to deliver a significant further JORC Resource upgrade.

Classic Minerals (ASX:CLZ)
CLZ has validated the decision taken to invest in the Gekko range of equipment for processing Kat Gap gold ore. The test work completed by Nagrom in the laboratory has now been confirmed with the Gekko Inline Pressure Jig and Gekko Spinner delivering more than 95% of the liberated gold through a simple gravity process at a crush size of less than 2mm.

Marmota (ASX:MEU)
Assay results have yielded Marmota’s best ever 1m intersection of 217g/t gold, at 118m downhole. Fire assays of the sample returned a grade of 230g/t, with a further test returning 203g/t, yielding an average of 217g/t gold.

Orthocell (ASX:OCC)
Results from the rotator cuff clinical study showed that OrthoATI was more effective than corticosteroid injection for treatment of rotator cuff tendinopathy with intrasubstance tendon tear. 82% of participants in the corticosteroid arm elected to crossover to OrthoATI, and experienced almost complete resolution of pain six months post-treatment, which was sustained at 12 months.