Market Highlights: Crude prices tumble 5pc; and 5 ASX small caps to watch on Wednesday

The ASX will open lower this morning after a 1% fall on Wall Street
US regional bank stocks tumbled again
Oil prices crashed around 5% on recession fears

The ASX is poised to tumble on Wednesday, tracking the moves in New York. At 8am AEST, the ASX 200 May futures contract was pointing down by 0.60%.

Overnight, Wall Street was rattled as traders focused on lingering doubts over the regional banks, rising recession odds, and growing risks that the US could default on its debt next month.

All three major US indexes – the S&P 500, the Dow Jones and Nasdaq – finished lower by around 1% each.

The Regional Banking Index (KRE) fell 6%, hitting a new one-year low as PacWest Bancorp fell 28% and Western Alliance by 15%.

Uber surged 11.5% after its quarterly results beat analysts’ estimates.

London-listed BP p.l.c. fell 3% after surprising investors with quarterly profits that came in lower than a year ago.

Hotel chain Marriott International rose 5% after sales and guidance jumped in the quarter from the pcp.

Fed preview

Last night’s US JOLTS data provided some optimism that the US labour market is softening, which could allow the Fed to refrain from remaining aggressive.

JOLTS reading for March saw job vacancies tumble to 9.59 million jobs – much lower than both the consensus estimate of 9.736 million, and prior reading of 9.974 million.

The US Fed is due to make its rates decision this Wednesday, New York time.

“Regardless of what is going to be said on Wednesday, I struggle to see how the markets would think that the Fed is definitely done with its hiking cycle,” said Erik Weisman, chief economist of MFS Investment Management.

“The Fed wants to rely on data and be anticipatory at the same time. We’re not sure it can be, especially given the speed with which this business cycle has evolved.”

The US is also teetering on the edge of a fiscal cliff, known as the debt ceiling crisis.

The debt ceiling is the limit on the amount of money the US government can borrow (issue debt/bonds) to pay for government services, such as social security, Medicare and the military.

Republicans want an increase in the borrowing limit be accompanied by spending cuts and other cost savings.

Treasury Secretary Yellen has said that “our best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1.”

“This is starting to look like 2011,” said Oanda analyst, Edward Moya.

“We will probably see around US$500 billion in deficit reduction, which could be what Democrats are willing to give so the debt ceiling can be raised.”

In other markets…

Crude prices plunged by over 5% overnight, with WTI now trading at US$71.50 a barrel.

Oil is in the danger zone as the banking crisis is crippling the short-term outlook for the economy.

“Oil basically has weakening prospects from the world’s two largest economies, China and the US, and if the macro backdrop deteriorates, momentum selling could easily send prices below the $70 level,” said Moya.

Safe haven gold meanwhile lifted by 1% to US$2,003.70 an ounce. Recession fears are growing and that should be a bonus for the yellow metal.

Bitcoin surged 2.5% in the last 24 hours to US$28,666.

According to Coindesk, the Bitcoin network hit a new all-time high for the number of daily transactions processed, on the same day the US government engineered a buyout of First Republic Bank.

Some experts have speculated this happened because Bitcoin has emerged as an alternative de facto monetary system.

5 ASX small caps to watch today

Universal Biosensors (ASX:UBI)
UBI has launched its PETRACKR blood glucose monitoring product for dogs and cats with diabetes. To coincide with the launch, UBI announced it has signed three distribution partnerships in the US and Canada, and received initial purchase orders of around $280k. First year sales value from these three deals is expected to exceed $2 million, with sales growth expected in the following years.

Lindsay Australia (ASX:LAU)
The freight and logistic services company announced the appointment of a new CEO, Clayton McDonald, effective 17 July 2023. McDonald has extensive leadership experience in the transport and logistics sector, and is currently an executive at Aurizon.

Aruma Resources (ASX:AAJ)
Initial processing of Mt Deans pegmatites test work has delivered promising results. Highlight outcomes include: Lithium concentrate produced via simple (unrefined) flotation, with recoveries of 80% Li2O into 25% of the mass. Tantalum and tin have been separated and accumulated by flotation, which would then be upgraded by simple gravity methods. Other metals were also captured – K2O, Rb2O, Cs, Sn and Ta – highlighting potential for valuable additional product streams.

Proteomics International (ASX:PIQ)
Research conducted with Janssen Research found a significant reduction in the PromarkerD risk scores for developing diabetic kidney disease in those who took the medication compared to placebo. Effect was greatest in participants predicted by PromarkerD to be at high-risk of a decline in kidney function at the start of the study. The research was published as a feature article in the peer-reviewed Journal of Clinical Medicine.

Nordic Nickel (ASX:NNL)
Extensive high-resolution UAV magnetic survey has highlighted potential for multiple Hotinvaara-style ultramafic intrusives at Pulju. Multiple magnetic anomalies were interpreted to be sourced from ultramafic intrusions of similar or larger size to that at the existing Hotinvaara JORC (2012) Mineral Resource Estimate (MRE). Several anomalies identified are associated with confirmed nickel mineralisation from historical shallow drilling.