• The ASX is set to extend gains on Monday
  • Earnings season continues, with Intel’s earnings raising an alarm for the chips industry
  • Fed’s interest rates decision this week


The ASX is on track to extend last week’s gains and at 8am AEDT, the ASX 200 Feb futures contract was pointing up by 0.15%.

On Friday, US stocks rose slightly as investors digested mixed earnings while staying cautious of the Fed decision scheduled on Wednesday (US time).

Recession risk seems to have faded now as traders price in a much lower Fed hike of just 25bp,  half of what it raised in December , as inflation cools down.

The Fed’s preferred measure of inflation, the so-called core PCE (personal consumption expenditures deflator), also eased from 4.7% to 4.4% according to data released on Friday.

The Fed watches the PCE data closely as it takes into account changing consumer behaviour such as people substituting lower price goods for higher-priced items.

Earnings season continues on Wall Street and this week we’ll see results from Exxon Mobil, GM, Spotify, Pfizer and McDonald’s amongst others.

Intel shares fell 6.4% on Friday and raised alarm for the chips industry as its Q4 earnings disappointed.

The chip maker posted Q4 revenue of US$14.04 billion, a miss of the US$14.49 billion forecast, and EPS (earnings per share) of US$0.10, a miss of the US$0.18 estimate.

Goldman Sachs announced that its CEO David Solomon took a 29% pay cut in 2022. Rival bank Morgan Stanley, Apple and Alphabet, have all recently announced pay cuts for their CEOs.

Meanwhile the US FDA surprisingly said it can’t vouch for the safety of cannabidiol (CBD), a nonpsychoactive compound found in cannabis.

In a big blow for the cannabis industry, the FDA said that CBD doesn’t fit the type of supplements or food additives it typically monitors, and claims that science is lacking on the safety of long-term CBD use.

In other markets, crude prices are having a little tug-of-war around the US$80 a barrel as the world awaits the Fed’s decision.

This week has two massive events for the oil market: the OPEC+ virtual meeting on output, and the FOMC decision.

“The Fed could prove to be very volatile for the dollar and growth prospects,” said OANDA analyst, Edward Moya.

Gold prices softened to US 1,927.97 an ounce after the PCE data cooled.

“Gold is vulnerable to some selling pressure as the Fed may refuse to take the Bank of Canada’s lead and stick to its inflation fighting manner,” Moya said.

Bitcoin was up 3% in the last 24 hours to US$23,748.

Credit ratings giant Moody’s is reportedly working on a scoring system for stablecoins.

The system will evaluate and rate the quality of the attestations of stablecoin reserves, although it will not be considered an official credit rating.

At the moment, third parties attest that a company’s claims are accurate and validate that stablecoins are backed 1:1 by their reserves.


5 ASX small caps to watch today

Quickstep (ASX:QHL)
The company has secured a contract award from Dronamics for the production and supply of the Black Swan unmanned cargo aircraft. Dronamics is the world’s first cargo drone airline, based in Europe with a well-advanced global network plan. The anticipated value of the contract is likely to be in the range of $4.5 to $5.5 million.

Nitro Software (ASX:NTO)
Nitro reported a strong Q4 growth, with a 27% increase vs pcp in annual recurring revenue (ARR) to $58.8m. Total revenue was up 31% on pcp to $66.8m. The company is in a strong financial position with cash balance of $28m and zero debt.

Kula Gold (ASX:KGD)
Aircore and RC drilling is being completed across a number of previously untested potential mafic and ultramafic ‘eye structure’ intrusive targets throughout the Westonia Project. Airborne helicopter VTEM has defined 3 conductors at various channels and has generated drill targets coincident with platinum, nickel, copper and gold soil anomalies.

Firebird Metals (ASX:FRB)
Successful completion of high-purity manganese sulphate monohydrate (HPMSM) test work program has produced results including the production of >99.8% purity manganese sulphate monohydrate crystal, which meets battery grades specification.

Biome Australia (ASX:BIO)
Biome generated record quarterly sales of $1.8m,up 103% vs the pcp. The company recorded $1.77m in cash receipts from customers, up 37% vs Q1 FY23. 
Cash balance was $3.73m as of 31 December.