Market Highlights: Inflation spooks Wall Street, Meta launches AI, and 5 ASX small caps to watch today

The ASX will open weaker on Monday, tracking the movements on Wall Street
US PCE came in hot, stoking fears of higher rates from the Fed
Meta launches AI product of its own

Aussie shares are set to open weaker on Monday after US stocks fell by more than 1% on Friday. At 8am AEDT, the ASX 200 March futures contract was pointing down by 0.70%.

Wall Street fell after the Fed’s preferred inflation reading, the PCE, came in scorching hot, prompting renewed bets the Fed will hike rates over the next three meetings.

Friday’s data also showed US consumer spending increasing by the most in nearly two years in January amid a surge in wage gains.

The 2-year US treasury yield breached 4.8%, the highest since 2007, after the release of the reports, while major currencies fell against the USD. The AUD fell to US67.31.

And it’s no surprise to hear more hawkish Fedspeak following the latest figures.

Fed’s Mester noted that PCE shows the central bank needs to do a little more. Fed’s Jefferson noted that “high inflation may come down only slowly.”

Even President Joe Biden released a White House statement about the PCE figure:

“Today’s report shows we have made progress on inflation, but we have more work to do,” the WH statement said.

Oanda analyst, Edward Moya commented,“The Fed’s rate hiking campaign looks like it might go into the summer, especially if the labour market refuses to break.”

“The risks that the Fed will have to send the economy into a recession are growing.”

Among the US companies to report earnings on Friday was Block Inc. Block rose 4% after it reported Q4 financial results that saw profit and revenue top expectations.

Afterpay contributed $196m in gross profit to Block’s bottom line, up from $150 million in the previous quarter.

Boeing closed 5% lower after the airline manufacturer said it paused deliveries of 787 Dreamliner jets due to documentation issues.

Meta or Facebook has joined the AI race with a LLama, which stands for Large Language Model Meta AI.

What’s different to Google, OpenAI, or Bing’s products is that LLama will be made available to AI researchers.

“Meta is committed to this open model of research,” Zuckerberg wrote.

To commodities, crude oil was around 1% higher despite stronger USD. Gold dropped 0.6% while iron ore slipped 2% to US126.75 a tonne.

Bitcoin rose 3% over the last 24 hours to US$23,627.

“The bond market selloff is getting ugly, and that could support downward pressure for Bitcoin to the lower boundaries of its $21,500 to $25,000 trading range,” said Moya.

To the ASX, companies to report their earnings today include: Woodside Energy, Yancoal, Telix, City Chic and Appen.

5 ASX small caps to watch today

Bigtincan (ASX:BTH)
The AI-driven software company reported strong figures for the first half including: Record H1 annual recurring revenue (ARR) of $130m, revenue growth of 31% to $60m on pcp, and Adjusted EBITDA of $2.1m which was up 74% on pcp. Bigtincan has confirmed the following guidance for FY23: Revenue in the range of $123m-128m, and Adjusted EBITDA to exceed $5m+.

Aussie Broadband (ASX:ABB)
For the first half, revenue rose 27% to $379m. EBITDA was up 86% to $41.1 million. Gross margin grew 250bp to 35%. Operating cashflow was up 35% to $30.8 million. Aussie fibre connectivity has accelerated with 100% of the core network completed, 288 buildings connected, 73 being provisioned, and over 1,400 within 1km available for connection.

Keypath Education (ASX:KED)
For the first half, revenue was US$58.7 million, 3.1% higher than the pcp. The company has US$51.5million in cash with no debt as of December 31. During the half, Melbourne Business School signed on as new partner to launch its part-time MBA course online. Meanwhile Southeast Asia continues to perform in line with internal expectations with a strong pipeline.

The GO2 People (ASX:GO2)
Another strong period of revenue growth for the recruitment company, with revenue for the first half of $43.02 million, up 19.7% from the pcp. During the half, GO2 delivered continued growth in its higher-margin activities such as training, executive recruitment, apprenticeships and Government contracts.

Kingfisher Mining (ASX:KFM)
Latest assays confirm 1.01% (10,100ppm) Total Rare Earth Oxides (TREO) with a significant Heavy Rare Earth Oxide (HREO) to TREO ratio of 79%. The high Dysprosium (Dy2O3 – 551ppm) and Terbium (Tb4O7 – 83 ppm) concentrations are similar to average values reported from Browns Range, Northern Minerals (ASX: NTU), and significantly greater than concentrations in other ionic clay REE deposits.