• The ASX 200 is set to open higher as US stocks advanced
  • The EURO STOXX 50 index is at a 15 year high
  • Big four banks facing headwinds, says fundie


The ASX 200 is set to open higher as US shares advanced on Friday. At 8am AEST this morning, the ASX 200 index futures was pointing up by +0.2%.

At the close of Friday, the S&P 500 index was up 1%, the Dow Jones +0.5%, and tech heavy Nasdaq by almost 2%.

Stocks lifted after personal income and consumption (PCE) data release in the US came in at its lowest level in nearly two years, bolstering the case of a peak in inflation. The PCE is a measure of inflation closely watched by the Fed Reserve.

To earnings, Intel rose 6% as it returned to profitability. Procter & Gamble rose 3% on quarterly earnings beat.

Ford Motor slid 3% after saying that it expects to see losses from electric vehicles of US$4.5 billion this year.

In Europe, German stock market rose to a record high as inflation in the country eased.

The Eurozone blue chip shares, as measured by the EURO STOXX 50 index, also rallied to their highest in 15 years.


Headwinds for big four banks

Reece Birtles, chief investment officer at Martin Currie, says that given their size and yield, Australia’s big four banks hold significant importance in the portfolios of equity investors, whether portfolio objectives are total return or income.

However, amidst a sluggish economy and increasing rates, Birtles said he has modelled lower household savings rates and lower house prices.

“As a result, we have adjusted our forward expectations for each bank’s relative valuation and re-evaluated our proprietary assessments of their ability to sustainably pay dividends at current levels,” said Birtles.

According to Birtles, the only realistic method for banks to repair their net interest margins (NIMs) will be by limiting the pass-on benefits on term deposits to customers when a rate-cutting cycle commences.

“Lower NIMs will lead to reduced revenues, which we believe will be even lower than the consensus estimates for the next three to five years,” he said.

Birtles concluded that:

“For portfolios focused on total return, we believe that inferior NIMs and rising potential loan losses support underweighting the banks sector vs. the ASX 200 Index.”


In other markets …

Gold rose +0.75% to US$1,960 an ounce as US dollar index backed down.

Crude prices fell by around -0.1%, with WTI now trading at US$80.50 a barrel.

Iron ore fell -0.87% to $US114.50/ a tonne.

Bitcoin meanwhile was down -0.65% in the last 24 hours to US$29,170.

Robert F. Kennedy Jr. (RFK), the Democratic US presidential hopeful, warned that Wall Street’s planned crypto “revolution” could” trap everyone in slavery.”

“They’re funnelling people into these ETFs,” RFK said, referring to Blackrock’s plan to have an ETF listed.

“As soon as they create a central bank digital currency (CBDC), BlackRock will transform those ETFs from bitcoin into CBDCs and trap us all in that kind of slavery.”


5 ASX small caps to watch today

New World Resources (ASX:NWC)
US private equity firm RCF Opportunities Fund has entered into a binding agreement to make a $5m equity investment in New World., where RCF will become a 6.9% shareholder in New World. RCF has a 25-year history with mining in the US, including Arizona, hence New World considers that this investment is a strong endorsement of its strategy to develop and expand its high-grade Antler Copper Project in northern Arizona.

Patriot Battery Metals (ASX:PMT)
Patriot has announced the largest lithium pegmatite resource in the Americas at CV5, Corvette Property, Quebec (109.2 Mt at 1.42% Li2O and 160 ppm Ta2O5 inferred). CV5 Spodumene Pegmatite is firmly established as the largest lithium pegmatite mineral resource in the Americas and the 8th largest globally.

MGC Pharmaceuticals (ASX:MXC)
MXC announced it has been granted its first import permit for 200g of Psilocybin Raw Mushroom material to its Slovenian research facility from Psyence Group Inc’s Southern Africa production site, as part of the deal between the two companies. Under the agreement, MGC Pharma will perform an analysis on the materials with a view to assist Psyence in the development of new psilocybin products to take to market.

Anteris Technologies (ASX:AVR)
Anteris reported that for the first time, DurAVR THV, a new class of biomimetic valve and the world’s only balloon-expandable, single-piece transcatheter aortic valve, was used in a valve-in-valve (ViV) procedure as part of Health Canada’s Special Access Program (SAP).

Galileo Mining (ASX:GAL)
First assays from recent RC drilling at the Jimberlana prospect show elevated metals in a newly discovered sulphide zone. Drill intersection includes an 11-metre zone starting from a shallow depth of approximately 53 metres below surface: 11 metres @ 0.21 g/t 3E1 , 0.18% Cu, 0.13% Ni and 0.03% Co from 61m downhole.


At Stockhead we tell it like it is. While New World Resources and MGC Pharma are Stockhead advertisers, they did not sponsor this article.