• ASX to open lower after a fall on Wall Street
  • Comments from three Fed officials spooked markets
  • Reddit signed data deal with OpenAI

 

Aussie shares are poised to give up yesterday’s big gains as Wall Street retreats from record highs. At 8am AEST, the ASX200 futures contract was pointing down by -0.6%.

Yesterday, the ASX 200 closed just +0.2% shy of its all time highs.

And in New York overnight, the blue chips Dow Jones briefly touched 40,000 for the very first time before pulling back to close -0.1% lower at 39,869. The S&P 500 was also down by -0.21%, while the tech heavy Nasdaq fell by -0.26%,.

Three US Fed Reserve officials – Loretta Mester, Thomas Barkin, and John Williams – all said that the central bank should be in no hurry to raise rates, and that it should keep rates high for a bit longer as it waits for more signs that inflation is cooling down.

“Holding our restrictive stance for longer is prudent at this point as we gain clarity about the path of inflation,” said Mester.

To stocks, OpenAI has just made a deal to access real-time content from Reddit‘s data API. This means ChatGPT and other new products can now include Reddit discussions. Reddit’s shares gained +9% on the news.

Walmart jumped +7% after reporting that sales at stores open for at least a year went up by 3.8% in the latest quarter compared to the same time last year. The company also raised its sales and profit forecasts for the year.

Meta Platforms fell -1.7% after it was revealed that the European Union was investigating whether the company’s algorithms are taking advantage of kids to get them hooked on Facebook and Instagram.

Meanwhile, Gamestop crashed by 30% and AMC Entertainment plunged by -15% as the meme stocks frenzy faded.

 

Where will the Dow go to next?

The Dow Jones’ index brief rise to an all time high of 40,000 is evidence that the market is pricing in a Fed rates cut this year.

This follows the slowdown in the US CPI (released on Wednesday), renewing hopes that the cut will happen in Q3.

“I believe if inflation continues to decline, the Federal Reserve may lean towards cutting interest rates and easing monetary policy,” said Rania Gule, market analyst at XS.com.

“Lower interest rates tend to stimulate the stock market because companies spend less money on debt costs, and consumers have more money to spend.”

Gule also sees the continued rise in the US stock market is being attributed to prospects of artificial intelligence.

However, Gule advised traders at this stage to remain cautious of volatility, especially in stocks that have shown significant price fluctuations influenced by social media and retail investor sentiment.

“Nevertheless, I believe prevailing economic conditions and policy expectations indicate that the upward trend in major stock indices is likely to continue in the short to medium term,” said Gule.

 

In other markets …

Gold price fell by -0.6% to US$2,378.40 an ounce.

Oil prices rose further by around +1%, with Brent crude now trading at US$83.40 a barrel.

The benchmark 10-year US Treasury yield rebounded by 4 basis points (bond prices lower) to 4.38%.

The Aussie dollar dropped by -0.2% following the rise in unemployment print yesterday to US66.81 cents.

The iron ore price rallied by +2.5% to US$116.55 a tonne.

Bitcoin meanwhile was down by -1.5% in the last 24 hours to US$65,244.

 

5 ASX small caps to watch today

Tambourah Metals (ASX:TMB)
Tambourah has been awarded an Exploration Incentive Scheme (EIS) co-funded drilling grant up to $180,000. The EIS grant is for diamond drilling targetng high-grade gold at the company’s Tambourah Gold Project. Tambourah is commencing field work at Tambourah to accelerate drilling in Q3.

Poseidon Minerals (ASX:POS)
Poseidon has recommenced greenfields exploration activities at Lake Johnston, following a four-month hiatus whilst the company was focused on the Lake Johnston sales process. Soil sampling planning to extend and infill the anomaly is underway. Planned surface sampling programs will continue onto the highly prospective Mantis Resources tenements.

Encounter Resources (ASX:ENR)
The first diamond drill hole (ESA001) at the 100%-owned Sandover project has intersected a narrow zone of high-grade copper mineralisation:0.3m at 2.1% Cu from 634.3m. Magnetic features have been identified adjacent to ESA001 and further geophysics, including a detailed magnetic survey, is planned prior to further drilling in the second half of 2024.

NextEd (ASX:NXD)
Total new international student (ELICOS and vocational) enrolments grew by 11% in the March quarter against the previous quarter, despite tighter immigration policy. NextEd’s cost base has reduced with targeted annualised savings of approximately $5 million from early FY25.

AIC Mines (ASX:A1M)
AIC Mines announced that the mining lease for the Jericho Copper Mine has been approved by the Queensland Government, Department of Resources. Jericho mining optimisation studies to reduce initial schedule risk and also longer-term operational risks are currently being finalised. The major component of this work is investigation of direct underground access to Jericho from the Eloise portal via a 3.6 kilometre link drive.