• ASX to open much higher on Friday
  • Wall Street swung from a big loss to a big win following the inflation report
  • US inflation is at a 40-year high

Local shares are set to open higher today. At 8am AEST, the ASX 200 October futures contract was pointing up by 1.5%.

It was one of the most volatile sessions on Wall Street in recent memory as the S&P 500 swung by 5% – from a 2.5% loss to close 2.5% higher.

The index had initially plunged after the US CPI report showed that inflation reached a 40-year high of 8.2% in September, versus the consensus forecast of 8.1%.

Core CPI, which excludes the volatile food and fuel prices, also rose to 6.6% versus consensus of 6.5%.

But after falling for the last six days, investors decided enough was enough and went on a buying rampage, causing the index to spike towards the end of the session.

Along with the S&P 500, the Dow Jones also rallied to finish 2.83% higher while Nasdaq was up 2.23%.

The red hot inflation should make the Fed’s job easier come November when the next FOMC meeting is held.

“The Fed will likely need to remain in tightening mode for a few more meetings, which would indicate rates will have to reach 5% or go even higher,” said OANDA analyst Edward Moya.

US treasury yields spiked (bond prices fell) after the inflation report, with the short dated two-year yield surging 19bp to 4.48%

The 10-year yield jumped 6bp to 3.96%, narrowing the 2y vs 10y spread. An inverted (2yr higher than 10yr) spread like this can often signal a possible recession.

In company news, US oil stocks rallied overnight as oil prices gained 2%.

Crude prices rose due mainly to a massive US SPR (Strategic Petroleum Reserve) draw, with many energy traders concerned about the low diesel inventories heading into winter.

“The crude demand outlook is going to see massive downgrades over the coming months, but right now it seems the market will remain tight,” said Moya.

“If China’s Covid situation doesn’t completely lead to massive lockdowns, oil should find a home above the $100 level.”

In other markets, most base metals prices were higher overnight but the iron ore price tanked 2%. Bitcoin meanwhile was up 1% in the last 24 hours to trade at US$19,400.

Looking ahead to today’s ASX session, China’s September CPI report is scheduled. There are no major economic releases in Australia.

5 ASX small caps to watch today

Ragusa Minerals (ASX:RAS)
Ragusa has received notification from the Northern Territory’s Mineral Titles office that the company’s 100% owned tenement EL33148 has been granted for a six-year period. The tenement is part of the company’s NT Lithium Project, located ~175km south of Darwin in the Wingate region south of Daly River.

Forbidden Foods (ASX:FFF)
FFF has landed multiple deals with US supermarkets. Its Blue Dinosaur brand has secured ranging in 375+ stores through two supermarket banners in the US – Fresh Thyme Market and ShopRite Supermarkets. Both supermarkets will stock all 4 Blue Dinosaur SKUs which have recently been manufactured in the US.

Pantoro (ASX:PNR)
Pantoro announced the first gold pour at the Norseman Gold Project (PNR 50%). Doré from the gravity circuit of approximately 8kg was poured on 13 October. Production from the leaching circuit is also underway.

Marmota (ASX:MEU)
Marmota reported that a single isolated wildcat hole in the first drilling carried out by any company on the Comet Tenement EL6084 has intersected gold (1.3g/t over 4m composite). Importantly, new detailed assays have substantially increased the grade to 7.7g/t over 1m (at 47m from surface).

Autosports Group (ASX:ASG)
Autosports through its wholly-owned subsidiary Prestige will purchase the land and buildings at 586 Wickham Street and 10 Light Street, Fortitude Valley, Queensland. The purchase price for the property is $98 million plus stamp duty. The company intends to fund approximately 80% through existing financiers and the balance through cash reserves.