• The ASX will open lower on Thursday, tracking moves on Wall Street
  • US Fed Reserve opted for a 50bp, but signalled it isn’t done with hiking
  • Chinese companies Alibaba and Baidu removed by Global X’s ETF

 

The ASX is poised to open lower this morning as the US Fed Reserve opted for a 50bp rate hike. At 8am AEDT, the ASX 200 Dec futures contract was pointing down by 0.50%.

Overnight, US stocks fell after Fed boss Jerome Powell said that policymakers were not close to ending their aggressive stance on rate hikes.

“We still have some ways to go,” Powell said at the post-FOMC meeting conference.

“Restoring price stability will likely require maintaining a restrictive policy stance for some time,” he added.

As expected, FOMC members raised the benchmark rate by 50 basis points to a 4.25% to 4.5% target range.

However, Powell’s comments have now increased the market’s projected terminal rate to 5.1%, higher than the consensus 5% before the meeting.

“Any hopes of a soft landing disappeared as the Fed seems like they are committed to taking rates much higher,” said OANDA analyst, Edward Moya.

 

The US dollar surged higher after the announcement, sending the Aussie slightly lower to US68.7c.

In company news, Delta Airlines rose 3% after it released a Q4 earnings-per-share guidance of $3.07-3.12, which was higher than the $2.89 consensus estimate.

“Demand for air travel remains robust as we exit the year and Delta’s momentum is building,” said Delta CEO, Ed Bastian.

Global X’s FANG ETF fund has removed Chinese companies Alibaba and Baidu from its portfolio following new rules governing its index.

On its website, Global X said:

“[Chinese] companies are now required to be incorporated in the US and have the US as their country of risk. ADRs and GDRs are now ineligible.

“This effectively removes Chinese companies like Alibaba and Baidu, which previously featured in the index.”

Meanwhile, crude oil jumped another 3%, with Brent now at US$83 a barrel.

Oil traders reacted to the Strategic Petroleum Reserve report, which saw another 4.75 million barrels taken away, which was the biggest amount taken in nine weeks.

To cryptos where Bitcoin is trading higher by 0.5% in the last 24 hours to US$17,834.

Cryptos are getting dragged down on the dollar rally, as the focus now turns to the extradition case for SBF.

5 ASX small caps to watch today

Select Harvests (ASX:SHV)
Select announced that the 2023 almond crop forecast has been completed. The FY23 crop forecast is 30,000 MT, compared to 29,250 MT delivered in FY22. Weather conditions have been cooler and wetter than normal, and pleasingly tree health has remained good, the company said. The 2023 crop is at the kernel hardening stage of the horticultural cycle, and subject to normal horticultural conditions.

Australian Ethical Investments (ASX:AEF)
AEF says underlying profit after tax (UPAT) for the half year will be between $4.5m-$5m. Meanwhile funds under management increased to $8.6bn as at November 30, up 39% from September 30.

Metals Australia (ASX:MLS)
Metals Australia has identified outstanding lithium potential on its 100%-owned tenements located within Patriot Battery Metals (ASX:PAT)’s Corvette Lithium Project in Quebec. The company will now undertake remote-sensing data interpretation followed by intensive field work to delineate prospective lithium-bearing pegmatite zones within its highly prospective properties.

Askari Metals (ASX:AS2)
Phase I RC drilling campaign has been completed at the Uis Lithium Project in Namibia which targeted high-grade spodumene hosted lithium mineralisation identified at surface. A total of 3,017m was drilled across 59 drill holes. Results are expected in February 2023.

Toubani Resources (ASX:TRE)
Following the company’s ASX listing in November, Phil Russo will commence as CEO of Toubani from January 9, 2023. Toubani says Russo’s integral knowledge of capital markets and strong relationships in the industry will bring the company to the next level.

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