• The ASX is set to follow Wall Street lower at the open on Thursday
  • US manufacturing data suggests more Fed rate hikes could be on the table
  • Elon Musk to unveil Tesla ‘Master Plan 3’


The ASX is poised to open lower on Thursday in line with New York. At 8am AEDT, the ASX 200 March futures contract was pointing down by 0.10%.

Overnight, Wall Street posted modest losses as the S&P 500 finished 0.50% lower and tech heavy Nasdaq fell 0.7%.

US stocks fell after the rise in ISM manufacturing data suggests the argument for more rate hikes is still very much relevant.

Fed’s Bostic is sticking to that script and calls for ongoing rate hikes,”I think we will need to raise the federal funds rate to between 5% and 5.25%, and leave it there until well into 2024.”

10-year US bond yield briefly rose (bond price selloff) and touched 4% on the report, before retreating to 3.99%.

“The argument for more rate hikes is elevated as material costs appear poised to rise, and as the Fed has yet to see a true demand slowdown,” said Oanda analyst, Edward Moya.

In stock news, electric vehicle (EV) maker Rivian crashed 18% after vehicle deliveries came in 20% below estimates in FY23.

Another EV maker, the NYSE-listed Chinese brand Nio Inc, fell 6% after providing weak revenue guidance.

Vaccine maker Novovax plunged 26% after saying that it will struggle to stay in business through next year after it struggled to develop a Covid-19 vaccine.

Meanwhile, Elon Musk is set to reveal ‘Master Plan Part 3 at the first Investor Day event from its gigafactory in Austin, Texas as we speak.

To commodities, crude oil prices and gold rose half a percent overnight, while iron ore surged by over 2% to US$126.05 a tonne.

Supporting oil prices was China’s impressive PMI data yesterday, which suggested the country’s demand outlook will continue to improve.

“Oil looks like it will stay stuck in a trading range, but the risk are clearly to the upside,” said Moya.

Bitcoin was up 1% on the last 24 hours to US$23,438.

On the technical chart, analysts says the 50-day moving average is currently located around $23K, which is providing support and could push the price upside to test the $25K level once more.

Looking ahead to today’s session on the ASX, we expect to see January’s building approvals data at 11.30am AEDT.


5 ASX small caps to watch today

Vection Technologies (ASX:VR1)
Vection announced the award of a major defence pilot order of ~$1 million for a top ten largest defence contractor in the world. This pilot order marks the first entry by the company into the production chain of the authorised NATO Tempest producers. If successful, Vection expects to finalise a subsequent order within the next six months.

Wide Open Agriculture (ASX:WOA)
WOA has secured debt facilities with National Australia Bank (NAB) for up to $12 million. This includes working capital financing of $4 million, and $8 million for WOA’s carbon neutral projects and domestic production of plant-based beverages in Australia.

Neometals (ASX:NMT)
NMT announced the execution of several landmark agreements that secure its 50% ownership and operatorship of the JV vehicle RISAB developing the first Finnish Vanadium Recovery Project. Neometals has also executed a technology licence for its Slag processing intellectual property to RISAB for a 2.5% gross sales royalty. 

Strike Energy (ASX:STX)
Strike has launched a fully funded gas acceleration strategy targeting up to four sources of gas production to come online by the end of 2025, commencing with Walyering in early 2023, to take advantage of attractive WA market conditions. Strike believes these market conditions have been brought about by a confluence of events, which include declines in existing supply sources, under investment, a lack of reserves replacement, poor exploration outcomes and an increase in demand.

Mamba Exploration (ASX:M24)
Detailed gravity modelling has been completed over the priority target at the Hyden REE Project. Modelling has identified a number of targets, including a late-stage intrusive feature that is interpreted to be a bedrock REE target. Drilling of ~ 50 holes (for ~ 2,500m) is currently being planned over the target.