• The ASX is set to open lower on Friday
  • The ECB hiked its rates for the 9th straight time
  • Analyst says “AI Gold Rush” has begun

 

The ASX 200 is set to open lower by 0.6% on Friday as the Dow Jones index’s 13-day winning streak finally came to an end.

Overnight, the Dow fell by 0.67%, the S&P 500 was down 0.64%, while Nasdaq slipped 0.55%.

European stocks rallied to their highest since February 2022 despite the ECB (European Central Bank) hiking its cash rate for the ninth straight time – by 25bp to 3.75%.

In a statement, the ECB said it would keep rates high enough to slow down the economy “for as long as necessary” to bring down inflation.

“Nobody should be surprised if the Eurozone were already in recession. Markets, however, continue to expect another hike in September,” said a note from investment manager, Ninety One.

In stock news, Southwest Airlines tumbled 9% after a dip in Q2 profit. Fellow travel stock Royal Caribbean surged 9% after the cruise operator lifted its profit forecast.

Chipmakers including Nvidia, Micron and Marvell Technology all rose after analysts predicted upbeat quarterly sales.

The US government meanwhile reported that GDP in the second quarter advanced by 2.4%, more than 1.8% expected.

 

‘AI Gold Rush’ is here

Wedbush Securities’ Dan Ives believes the “AI Gold Rush” has begun, and a  new tech bull market is upon us.

He likens the current AI Gold Rush to the ‘1995 Moment’, which marked the the start of the internet, instead of a 1999/2000 Bubble Moment, when it burst.

“The transformational AI trend is being seen across all facets of the enterprise and consumer world,” said Ives in a note.

“We believe this will inject roughly $US800 billion of new IT projects and spending into the tech world over the next decade with many winners in this 4th Industrial Revolution.”

He added that recent Big Tech earnings have been a “flex the muscles” moment for the bulls, and the fundamental growth stories are now inflecting into the second half and 2024.

“So far, so good from tech earnings in this key week, with more good news expected over the coming weeks with Apple and Amazon marked on the calendar next Thursday for all on the Street,” Ives said.

 

In other markets …

Gold tumbled 1.3% to US$1,945 an ounce mainly on the resilient US GDP data.

Crude prices lifted by around 1%, with WTI now trading at US$79.65 a barrel.

“The oil markets are concerned that there will be a significant tightening this half of the year…”, said oil analyst, Julianne Geiger.

Iron ore (62% Fe) traded flat at $US112.90 a tonne.

Bitcoin meanwhile was down 1% in the last 24 hours to US$29,191.

Morgan Creek Capital Management founder Mark Yusko said Bitcoin may reach US$300k by 2028.

Yusko compared Bitcoin to gold, but said Bitcoin had an advantage because it is divisible.

“The monetary value of gold is about 6 trillion, I think Bitcoin can replace all of that, the monetary equivalent of $6 trillion is about a 10X from here, which gives us a price of about $300K,” Yusko told Coindesk.

 

5 ASX small caps to watch today

Beforepay (ASX:B4P)
Beforepay delivered a positive EBITDA of $0.57m in Q4. This is the first positive EBITDA for the company in its six quarters as a public company, and demonstrates the significant progress it has been making towards profitability. The company attributed this outcome to its ability to both tightly control operating expenses even while growing strongly, and to its strong data-driven approach to risk management.

Bravura Solutions (ASX:BVS)
Wealth management software provider Bravura announced that Andrew Russell has been appointed as group CEO effective immediately. Russell has been interim CEO since June, while the board undertook a global external executive search for a permanent CEO. Ultimately, the board decided that Russell was the best candidate for the role.

Pointsbet (ASX:PBH)
Pointsbet delivered strong Group Net Win of $102m in Q4, up 19% on pcp. For the whole of FY23, Net Win was $391m, up 26% on pcp. During the quarter, Pointsbet got shareholder approval for the sale of its US business for around US$225m. The company intends to distribute to shareholders the net sale proceeds together with the majority of corporate cash reserves.

Industrial Minerals (ASX:IND)
Positive discussions with potential offtake partners are continuing. In addition, IND is evaluating third-party processing options in China. During its recent trip to China, IND visited potential ports facilities, industrial parks, and a silica sand processing plant manufacturer with the potential offtake partners.

Piedmont Lithium (ASX:PLL)
Piedmont’s Tennessee lithium project has received the final permit required to advance to construction. The company says the project’s planned capacity of 30,000 tons per year would nearly triple current domestic production.

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