Market Highlights: Euro inflation hits record high and 5 ASX small caps to watch on Thursday

The ASX will open lower on Thursday
Wall Street slipped for the fourth consecutive day
Europe’s inflation hits a new record

Local shares are set to open lower today. At 8am AEST, the ASX 200 September futures contract is pointing down by 1%.

On Wall Street, losses picked up towards the end of the session with the S&P 500 finishing lower by 0.78%, the Dow Jones by 0.88%, and Nasdaq by 0.55%.

It was the fourth straight day US stocks have fallen and for the month of August, the US stock market has slipped by around 4%. Pretty much every major asset class – stocks, bonds, and commodities – slid in August.

Addentax Group – a China-based garment manufacturer, logistics service, and property manager – surged on its first day of listing on Nasdaq, from its IPO price of US$5 to close at US$656.

In economic news, private payrolls in the US grew by just 132,000 for the month of August, a decrease from the 268,000 gain in July, according to the ADP employment data released overnight.

Whilst it points to a potential economic slowdown, it was also a sigh of relief on the inflation front.

In Europe, inflation has hit a new record high in August at 9.1% according to flash figures from Europe’s statistics office Eurostat, versus consensus of 9%. Energy had the biggest increase, up by 38.3% year on year.

The ECB hiked its rates by 50bp to zero in July, and the next rates decision will be on September 8.

“It looks inevitable that the euro area is headed for a recession. The question is only how deep it will be and how long it will last,” Kenneth Wattret, head of economics at S&P Global Market Intelligence, told CNBC.

In other markets, the oil price’s descent continues, slumping by another 3% overnight. Brent crude is now trading at US$94.89 a barrel.

Concerns about the ailing state of the global economy and fresh COVID-19 lockdowns in China have spooked oil hedge funds and speculators, making the market whipsaw even more.

“Crude prices have been trending lower as the oil market doesn’t look that tight anymore, but this last wave of weakness will likely be followed by a reduction in OPEC+ output,” said Oanda analyst, Edward Moya.

Gold has also slumped by another 1.7% to trade at US$1,710 an ounce.

“Gold is still vulnerable to a break of the $1700 level, but long-term bets should start to return as investors scramble for safe-havens,” said Moya.

Bitcoin meanwhile is hovering around the $20,000 level despite global stock market weakness. At 8.30am AEST, Bitcoin is changing hands at US$20,136, up by 1.3% from 24 hours ago.

Looking ahead today, a bunch of economic data will be released in Australia including:
– CoreLogic Home Value index for August,
– Business investment for the June quarter,
– Housing, personal, lease & business loans indicators for July,
– and Purchasing managers’ index for August.

5 ASX small caps to watch today

Truscreen (ASX:TRU)
TruScreen has signed a five-year manufacturing agreement with Zapco for the critical supply of Single Use Sensors (SUS). The SUS is a key consumable component for Truscreen’s cervical cancer screening medical device. The company says it expects to sell over 200,000 devices this year.

Pharmaxis (ASX:PXS)
Leading charity, Parkinson’s UK, will provide £2.9m (~$5m) to fund a Phase 2 study of the Pharmaxis drug, PXS‐4728. Working in collaboration, experts from the University of Sydney and the University of Oxford will recruit 40 patients with iRBD (isolated Rapid Eye Movement Sleep Behaviour Disorder) to participate in a placebo‐controlled Phase 2 trial.

Quickstep Holdings (ASX:QHL)
Quickstep announced that it has secured new orders from leading Australian drone companies for composite airframe parts totalling $5.4 million. The company also announced that it has doubled the size of its Geelong facility to accommodate future anticipated demand.

Cygnus Gold (ASX:CY5)
Cygnus has appointed two highly experienced lithium experts to help drive the upcoming exploration campaign at its recently- secured Pontax Lithium Project. Gareth Reynolds has been appointed head of Business Development; and Mark Calderwood has been appointed as an advisor to the Cygnus board.

Helix Resources (ASX:HLX)
Significant intercepts of copper mineralisation have further defined the north & south shoot positions at its Canbelego Joint Venture (JV) Project located in the Cobar region of NSW. Results include: 3m at 1.3% copper from 292m downhole in the North Shoot; and 7m at 1.0% Cu from 160m downhole, including 4m at 1.2% Cu in the South Shoot.