Market Highlights: Dow Jones officially in bear market and 5 ASX small caps to watch on Tuesday
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Local shares are set to open higher on Tuesday. At 8am AEST, the ASX 200 October futures contract is pointing up by 0.25%.
Overnight, investors were in a ‘sell everything’ mood as they dumped most major asset categories.
Wall Street sold off with all three major indexes (S&P 500, Dow Jones, and Nasdaq) tumbling by around 1% each.
The Dow is now officially in a bear market, which is defined as a 20% fall from the last high. The S&P 500 is at its lowest point in 2022.
The bond market also sold off, with the US 10-year yield soaring to 3.92%, the highest in 12 years.
Oil prices were down another 3% as the benchmark Brent crude tumbled to US$83.80 a barrel.
Gold broke a major support level and was down 1% to US$1624.75 an ounce.
Comments by Fed Reserve Bank of Cleveland president Loretta Mester helped to raise market anxiety after she said that further rate increases were necessary.
“While this has been a relatively fast pace of tightening, given the current level of inflation and the outlook, I believe that further increases in our policy rate will be needed,” she said.
Other metal prices also remained under pressure.
Silver was down by 2.5%, copper by 2%, while spot iron ore slipped by 3.5% to US$96.05 a tonne.
But OANDA analyst Edward Moya reckons it’s not yet time to buy the dip.
“Wall Street is realising that we won’t be seeing a significant sign that inflation is easing fast enough in the next couple of months and that should make it tough to buy the dip just yet,” he said.
The currency market has been volatile and extreme since the UK Chancellor Kwarteng’s announcement of tax cuts.
The US dollar is now at an all time high against major currencies.
“The FX market is getting dangerously close to having too many extreme positions against the pound and euro, while many wait to see what the PBOC (China’s central bank) allows to happen with the yuan,” Moya said.
In company news, casino stocks soared overnight after the world’s biggest gambling hub, Macau, said the city would resume visas for mainland Chinese travellers and permit group tours.
Both Wynn Resorts and Las Vegas Sands soared 12% on the news.
Meanwhile, Bitcoin was up 1.5% in the last 24 hours to trade at US$19,147 this morning. Ethereum continues to struggle at around US$1,300 since the Merge took place 11 days ago.
Looking ahead to today’s session, NZ Reserve Bank Governor Orr will be speaking, while China will release its August industrial profits data.
PYC Therapeutics (ASX:PYC)
PYC has added a new third drug program targeting the central nervous system to its pipeline. This follows in vitro results demonstrating an ability to correct the faulty gene expression responsible for causing Phelan-McDermid Syndrome.
Synlait Milk (ASX:SM1)
Synlait has reported its full year results for FY22. Top line revenue was up 21% to $1.66 billion, while bottom line NPAT was up $67 million to $38.5 million. SM1’s balance sheet has returned to normal metrics (net debt to EBITDA ratio of 2.6x) enabled by strong operating cashflows and inventory reduction.
Minerals 260 (ASX:MI6)
Further significant gold mineralisation were intersected in follow-up reverse circulation (RC) drilling at the Angepena prospect, part of the 100%-owned Moora Project in WA. Results include: 16m @ 2.8g/t Au from 48-64m. The company has a strong cash position (~$23m at 30 June) to maintain the exploration momentum at Moora and other projects.
Labyrinth Resources (ASX:LRL)
Labyrinth reported an Initial Inferred Mineral Resource of 3 Mt @ 5.0g/t Au for 500,000 oz (at 3g/t.m cut-off) at its Labyrinth Gold Project in Canada. The company says there is an outstanding potential for further growth with resource open in all directions, and high-grade mineralisation already intersected well outside the resource boundaries.
Ragusa Minerals (ASX:RAS)
The company has advised progress towards commencement of the maiden drilling program at the NT Lithium Project, with completion of site preparation earthworks, including access track and drill pad clearing. Additional lithium bearing pegmatite targets have been identified in the field, and drilling works are planned to commence next week.