Market Highlights: Fed projects one more rate hike, Klaviyo's debut, and 5 ASX small caps to watch

ASX to open lower again on Thursday
The US Fed held rates steady, but opened the door for one more hike in 2023
Klaviyo (NYSE: KVYO) made its listing debut overnight

Australian shares are poised to track Wall Street and open lower once again on Thursday. At 8am AEST, the ASX 200 index futures was pointing down by -0.2%.

In New York, the S&P 500 fell by -0.94%, the blue chips Dow Jones index was down by -0.22%, and the tech-heavy Nasdaq fell by -1.53%.

Tech stocks in particular fell heavily after the US Fed held interest rates steady, but projected one more rate hike in 2023 and cuts in 2024.

In the post meeting statement, the Fed’s Summary Economic Projections (SEP) and dot plot suggests “an additional 25 basis point rate hike this year, peaking in the 5.5 to 5.75% range”.

Fed officials also saw its “overnight lending rate to be 5.1% at the end of 2024 (5.25% – 5.5% currently)”.

“They’re talking about higher rates for longer, but it’s really the economy that matters,” said Gennadiy Goldberg of TD Securities.

“And if the economy starts to soften, I don’t think these dot plot projections will actually hold up.”

Bond yields in the US and Europe jumped after the statement, with the US Treasury 3-year yields climbing to the highest level since 2006.

To stock news, marketing automation firm Klaviyo (NYSE: KVYO) made its public debut overnight with a valuation of US$11.3 billion. The shares closed the day more than 30% higher.

IBM rose more than 2% after RBC Capital Markets initiated coverage on the stock with an ‘Outperform’ rating and a price target of US$188 (vs current price of US$150).

BofA bumps up stock market prediction

In a note to investors, Bank of America’s (BofA) strategist Savita Subramanian has boosted her S&P 500 year-end prediction from 4,300 to 4,600 (a 4.5% upside from today’s level)

Subramanian said that artificial intelligence, automation and labor efficiency will drive productivity, adding that investors “have not priced this theme as richly”.

Subramanian also said that stocks will rise on better-than-expected macroeconomic and earnings data.

She warned however that recent positioning shows that investors could be bracing for further declines in tech stocks.

Based on data since 1999, BofA found the average S&P 500 year-end target at the end of August typically projects 5% gains through the end of the year.

In other markets …

Gold price traded flat US$1,930.69 an ounce.

Crude prices fell -1.3%, with Brent closing at US$93.17 a barrel.

Base metals prices were mixed, with nickel futures losing ground by -1.8%, and copper futures higher by +0.54%.

Iron ore futures fell -0.3% to US$121.83 a tonne.

The Aussie dollar was down around -0.1% to US64.51c.

Bitcoin meanwhile fell -0.35% in the last 24 hours to trade at US$27,094.

5 ASX small caps to watch today

Neometals (ASX:NMT)
Neometals says the Australian Patent Office has granted a patent for the key process steps of its lithium-ion battery recycling process. The LiB Recycling Technology, co-owned 50% by Neometals’ Primobius joint venture partner, SMS group, recovers materials contained in LiB production scrap and end-of-life cells that might otherwise be disposed of in land fill.

Immutep (ASX:IMM)
Immutep announced regulatory authorisation of eftilagimod alpha manufactured at commercial 2,000L scale for use in clinical trials across multiple European countries including Germany, Belgium, Denmark, and the United Kingdom. Immutep plans to introduce efti manufactured by the 2,000L scale process into current and future clinical trials.

Vulcan Energy Resources (ASX:VUL)
Vulcan has been granted a new geothermal and lithium brine exploration licence covering a region of Frankfurt am Main, an area with potential industrial customers like the Höchst Chemical Park and Frankfurt Airport. The company plans to use geothermal renewable energy to decarbonise large industrial areas of Frankfurt through heat supply with potential for lithium extraction.

New Zealand King Salmon (ASX:NZK)
NZK reported that 1HY24 net profit was $10.6 million, compared to a net loss of $24.5m in the pcp. Revenues increased from $80m in 1HY23 to $91.6 million in 1HY24. Earnings guidance range has been revised up to $23.5m – $27.5m (from the original guidance range of $21m – $25m in March).

Rubix Resources (ASX:RB6)
Rubix announced the appointment of Dr Casey Blundell as CEO effective immediately. Dr Blundell joined Rubix Resources in June 2022 as senior geologist and exploration manager. Her appointment to CEO comes after the recent acquisition of the Ceiling Lithium Project in James Bay, Quebec.

At Stockhead we tell it like it is. While Vulcan Energy Resources is a Stockhead advertiser, it did not sponsor this article.