Market Highlights: Hawkish Fed, a hard landing, and 5 ASX small caps to watch on Friday

The ASX faces a tough session to close out the week
Wall Street has fallen for the last two days after the Fed’s 75bp rate hike
Fed Chairman Powell said the US might be heading for a hard landing

Local shares are set to open lower on Friday. At 8am AEST, the ASX 200 October futures contract was pointing down by 0.25%.

Overnight, Wall Street tumbled for the second consecutive day following the Fed’s third straight 75bp hike on Wednesday night.

Fed Chairman J Powell noted the FOMC is split between 100 and 125 bp of further rate hikes for the rest of the year.

Powell conceded the US economy might be heading for a hard landing and into a recession.

“We’ve written down what we think is a plausible path for the fed funds rate. The path that we actually execute will be enough. It will be enough to restore price stability,” Powell said.

“No one knows whether this process will lead to a recession or, if so, how significant that recession would be,” he added.

As if coordinated, the Fed’s move was matched by similar moves by the central banks of other developed countries.

The Bank of England increased its rates by 50bp, the Swiss National Bank by 75bp, Norway by 50bp, and Canada is expected to hike by 50bp.

Only Japan has bucked trend, electing to retain its dovish stand.

Global Central Bank Update:
-The Fed hiked rates for the 5th time this year, 75 bps increase to 3.00-3.25%. This is now the highest Fed Funds Rate since January 2008. pic.twitter.com/PRwDWujoRB

— Charlie Bilello (@charliebilello) September 21, 2022

US tech stocks meanwhile fell overnight as government Treasury yields surged strongly – the 2yr yield rose by 12bp, and the 10 yr yield by 19bp.

Chip maker Nvidia tumbled the most, down by 5%.

US home sales meanwhile declined to 4.80 million, the seventh straight monthly decline.

“The housing market will continue to cool especially considering yesterday’s plunging building permit data, and with the 30-year fixed mortgage rate surging to 6.25%,” said OANDA strategist, Edward Moya.

Oil prices went on a rollercoaster as energy traders watched Russian President V Putin escalate the war in Ukraine.

Putin announced a “partial mobilisation” of Russian citizens, and noted they would use “all the means at our disposal” – inferring that Russia’s nuclear arsenal is not off the table

“Putin is obviously frustrated with Ukraine’s counter-offensive and recapturing of territory. Investors are now worried that a major escalation could be near and that is weighing on European assets,” said Moya.

In other markets, iron ore rose 2.5% to US98.75 a tonne, spot gold was steady at $US1673.08/0z.

Bitcoin gained 4% in the last 24 hours to trade at US$19,246.

Looking ahead to Friday’s session, preliminary S&P Global purchasing managers’ indexes (PMI) will be issued by the ABS.

5 ASX small caps to watch today

Pointsbet (ASX:PBH)
PointsBet has received launch authorisation from the Louisiana Gaming Control Board, and has taken its first bet in the State of Louisiana. The launch in Louisiana marks the fourth state launch under the partnership with Penn National Gaming announced in 2019. It also represents the company’s 12th online sportsbook operation in the US.

Motorcycle Holdings (ASX:MTO)
MTO will acquire Mojo Group, one of Australia’s largest importers and wholesalers of motorcycles, genuine spare parts, and accessories. The total consideration was $60 million on a non-cash, debt-free basis. The transaction is expected to be 18% earnings per share accretive before synergies and integration costs.

Felix Gold (ASX:FXG)
Assay results at Felix’s Treasure Creek Project in Alaska have shown the discovery of multiple new gold zones. Near-surface intercepts returned include: 12.2m @ 2.65 g/t Au from 73.2m downhole, and 3.0m @ 3.2 g/t Au from 36.6 downhole.

SSR Mining (ASX:SSR)
SSR mining has required regulatory approvals from Türkiye’s Government authorities, and has commenced restart of all operations at the Ҫӧpler mine as of September 22nd. During Ҫӧpler’s temporary suspension, the company accelerated and completed planned maintenance in Ҫӧpler’s sulfide plant that had been previously scheduled for the fourth quarter of 2022.

Lepidico (ASX:LPD)
Front End Engineering & Design (FEED) for the Phase 1 chemical plant in the UAE is now scheduled to complete in November. In addition, the company updated its Measured & Indicated Mineral Resource estimates for its Helikon 4 project in Namibia, with the objective of extending Phase 1 operating life to 20 years.