Market Highlights: Gold flies to record high after Powell speech, and 5 ASX small caps to watch today

Wall Street rebounds after Jerome Powell speech
Gold is at record high
Why AI investing is more than just Nvidia

The ASX is poised to rise on Thursday, tracking the rebound on Wall Street. At 8am AEDT, the ASX 200 index futures contract was pointing up by +0.5%.

Overnight, the S&P 500 rose by +0.5%, the blue chips Dow Jones index was up by +0.2%, and tech-heavy Nasdaq climbed by +0.58%.

The upward trend for gold continues, as the bullion price surged to a record high, trading now at US$2,146/oz.

It was weak economic data in the US over the past few days, increasing bets on rate cuts starting from the US Fed in June, that gave gold real kick over the line.

Comments from Fed boss Jerome Powell also spurred gold to continue its record setting rally.

In his semi annual testimony to the US Congress, Powell reiterated the possibility of a rate cut some time this year.

“We expect inflation to come down, the economy to keep growing. If that’s the case, it will be appropriate for interest rates to come down significantly over the coming years,” Powell added.

To stocks, Apple has now fallen for 6 straight days, down another -0.6% last night. Tesla also fell by more than -2%.

Chinese retail stock, JD.com, which is also traded on Nasdaq, surged +16% after quarterly revenues topped estimates and buyback plans.

Foot Locker sank -30% after the company provided a full-year earnings guidance that missed analysts’ expectations by a large margin.

AI investing is more than just Nvidia

Everyone wants a piece of the AI trend, and Nvidia has been the preferred vehicle of choice for most investors.

The obvious risk is that concentrating in a single security leaves you vulnerable to company-specific shocks; and Wall Street’s answer to that has been investing in AI-themed ETFs.

The problem is that AI-themed funds are quickly running into the same issue – too much exposure to Nvidia.

Taylor Krystkowiak, Vice President & Investment Strategist at Themes ETFs, issuer of the Themes Generative AI ETF (WISE), says investors can diversify beyond Nvidia without sacrificing performance when it comes to capturing the AI trend.

Krystkowiak says there are under the radar AI stocks, lesser known names that have delivered impressive returns, and they might just be getting started, including: SoundHound (SOUN) and BigBear (BBAI).

US-based stocks tend to hog the headlines, but there is tremendous potential in AI leaders overseas, including: PKSHA Technology (Japan-based) and BrainChip (ASX:BRN).

According to Krystkowiak, it’s easy to gloss over one of the most basic principles of investing when targeting a hot trend like AI.

“But diversification is essential if you want to reap the benefits for the long haul.

“Themes Generative AI ETF (WISE) is outperforming every AI-themed competitor in the last month and year-to-date without weighting a single-stock (like NVDA) beyond 10%,” he said.

Other markets …

Gold price rose by +0.87% to US$2,145.85 an ounce, a record high.

Oil prices bounced back by +1%, with Brent now trading at US$82.93 a barrel.

The benchmark 10-year US Treasury yield slipped by around 3 basis points (bond prices higher) to 4.11%.

Iron ore futures climbed by +0.6 % to US$115.15 a tonne.

The Aussie dollar rose by almost 1% to US65.63c. This came after Powell’s dovish comments last night, which drove the USD lower against major currencies.

Bitcoin meanwhile was up another +4% in the last 24 hours to US$66,527.

5 ASX small caps to watch today

Dreadnought Resources (ASX:DRE)
Dreadnought’s ongoing review of the ~4,000 kms2, 100% owned, Bresnahan Uranium, Heavy Rare Earths and Gold-Silver-Antimony has highlighted a dozen significant untested unconformity and paleochannel uranium targets from extensive geophysical data acquired by Cameco and Vale in the early 2000s. Discussions are underway regarding partnerships or commercialisation of Bresnahan.

Heavy Minerals (ASX:HVY)
HVY announced that it has signed a non-binding MOU for the future sales of a minimum of 15,000 tpa (tonnes per annum) of Garnet to be produced at its Port Gregory Project for an initial 3-year period with ABSS (Abrasive Blasting Service & Supplies).

Brightstar Resources (ASX:BTR)
BTR announced that the first gold bars from processing of ore from the Selkirk Mining JV have been produced, with 38.7kg of gold doré poured yesterday at the Gwalia gold plant. BTR says current record high of gold price at positions Brightstar well for project economics.

Altamin (ASX:AZI)
AZI announced that it has signed a non-bindin MOU with IREN SpA, one of Italy’s largest multi-utility companies, for a potential collaboration for critical raw material production at the Lazio Geothermal Lithium Project. The MOU provides that the AZI and IREN agree to cooperate and work together in good faith to maximise the probability of success of critical raw material production of the Lazio Project.

Marmota (ASX:MEU)
Marmota has completed Stage 4 of the Junction Dam project review by uranium specialist, Mark Couzens. Stage 4 focuses on the NW corner of Marmota’s Junction Dam tenement immediately adjacent to where Boss Energy (ASX:BOE) has just completed their own drilling program. Notably, Boss’s highest uranium resource grades come from the Jason’s area. Focus will now turn to preparing the first re-start drill program at Junction Dam.

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