• ASX to open much lower after heavy selloff on Wall Street
  • Tesla, United Airlines and Morgan Stanley tumbled
  • Netflix jumped +12pc after posting best subscriber growth in years

 

Aussie shares are poised to open lower after a heavy selloff on Wall Street. At 8am AEST, the ASX 200 index futures was pointing down by -1.2%.

In New York, the S&P 500 tumbled by -1.34%, the blue chips Dow Jones was down by -0.98%, and the tech-heavy Nasdaq crashed by -1.62%.

Stocks retreated on concerns that war in the Middle East could explode into an all-out regional one after Iran notched up its rhetoric against Israel following the deadly explosion at a Gaza hospital.

10-year US treasury yields surged, up by 6bp (bond prices down), as traders scrambled for the safe haven of gold and cash.

In stocks news, Tesla was down -5% but rallied +1.5% after the bell despite reporting Q3 earnings of US66 cents per share, versus US73 cents expected. The company’s total operating margin came in at 7.6%, down significantly from the pcp’s figure of 17.2%.

Netflix jumped +12% after the bell after announcing it had added 8.76 million customers in the last quarter, the best growth in years. Netflix also said it was raising prices for some customers in the US, UK and France.

Meanwhile Morgan Stanley plunged -7%, the most since 2020, after sluggish performances from its investment bank and wealth management units.

United Airlines also slipped -10% after saying flights to Tel Aviv could be suspended through October or even through year-end.

Giant lithium miner Albemarle was also down -10% after getting a downgrade from BofA analysts to ‘underperform’ due to concerns about the outlook for the lithium market.

 

Where to invest in as we head to year end

As we head towards end of this year, the question is whether the investment climate will begin to turn bleak.

Stephen Dover, chief market strategist at Franklin Templeton Institute, said many of his highlighted investment opportunities from mid-2023 remain in place, with some subtle tilts.

“Fixed income has returned as an effective diversifier, justifying an increasing allocation in a balanced portfolio and extending duration beyond cash,” said Dover.

“Within the equities space, investors may want to consider moving beyond the ‘Magnificent Seven’ US technology names.”

Dover added that mid-cap and small-cap businesses offer more potential for innovation and disruption than large-cap businesses.

“In addition, defensive equities with more resilient earnings streams may be poised to rebound as they have become more attractively valued relative to more economically sensitive sectors.

“There is also an opportunity to rotate from quality dividend-paying companies into higher-quality fixed income, picking up substantial yield from lower-risk assets,” said Dover.

 

In other markets …

Oil prices surged another 1.8% as the war escalated in Palestine, with hundreds reportedly killed at a Gaza hospital. Brent is now trading at US$91.31 a barrel.

Gold price rallied 1.2% to US$1,946.10 an ounce on flight to safety.

Iron ore futures fell by -0.25% to US$119.01 a tonne.

Nickel and copper futures traded flattish.

The Aussie dollar slipped -0.5% to US63.39.

Bitcoin meanwhile fell by -1% in the last 24 hours to US$28,277.

 

5 ASX small caps to watch today

Avita Medical (ASX:AVH)
Avita reported preliminary Q3 commercial revenue of $13.5 million, and confirmed guidance for the full year of FY23. During the quarter, the company has also secured up to $90 million of non-dilutive debt financing with OrbiMed to support growth initiatives and strategic expansion.

NewPeak Metals (ASX:NPM)
David Mason has been appointed as interim CEO of NPM effective from 3 November. Mason is a non-executive director of NPM, and former CEO of NPM, and will act in the role of interim CEO pending the appointment of a CEO. He replaced Boyd White who resigned earlier this month.

MetalsTech (ASX:MTC)
MetalsTech has commenced field exploration program at its 100%-owned Sauvolles Lithium Project, in James Bay Lithium District of Quebec, Canada. Field program will focus on the 11 high priority targets generated from a recent hyperspectral survey, and will consist of outcrop identification, field mapping, rock chip sampling and general mapping of the prospective geology.

Experience Co (ASX:EXP)
Experience reported a 25% increase in sales revenue vs pcp for Q1FY24 to $29.5m. Skydiving revenue was up 62%, while Adventure Experiences was up 8%. Australia saw continued growth in volume due to improving inbound visitation. In NZ, the business continued its strong recovery with record jump days during early stages of Golden Week holiday in late September.

Auric Mining (ASX:AWJ)
Stage One gold production has surpassed 7,700 ounces at 15 October, as toll milling continues. A total of 166,000 tonnes of gold ore have now been delivered to the Greenfields Mill at Coolgardie for processing.

Auric says it’s on target to process 180,000 tonnes for Stage One, from which it’s expected to produce more than 9,500 ounces of gold. First cash to Auric is expected in the week commencing 23 October.

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