Why small caps could be winners post US election. Pic via Getty Images
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The ASX is set to rise modestly when the market opens on Thursday despite stocks dipping in New York.
At 8am AEST, the SPI ASX200 futures contract was pointing up by 0.2%.
Overnight, the S&P 500 slid by 0.19% after a wobbly session as investors mulled over the Fed’s rate-cut plans and sifted through housing market data.
The blue chips Dow Jones index was also down by 0.7%, and the tech heavy Nasdaq closed flat.
In stock news, Micron Technology saw its shares jump 14% in after-hours trading after posting earnings that beat estimates and unveiling a strong revenue forecast fuelled by demand for AI.
Nvidia also climbed around 0.7% following the news.
Sports betting stock Flutter Entertainment jumped as much as 8% to reach an all-time high after the company revealed a US$5 billion share buyback plan and said the US online gambling market will grow by 60% more than it forecast two years ago.
Other wagering stocks also rose, with DraftKing rising by 5%.
Meanwhile, Warren Buffett’s Berkshire Hathaway has trimmed its stake in Bank of America again, selling off 21.6 million shares and raking in about US$862 million in profit. BofA’s shares were down 0.5%.
Elsewhere, ASX listed iron ore stocks will be in focus again today after iron ore prices rose further last night, this time by around 2%. The recent rise in iron ore prices has been driven by China’s monetary stimulus announcement.
Over in Europe, some recent shaky economics data have sparked speculation that the European Central Bank may cut rates again soon. Economists at HSBC predict cuts at every meeting from October to April.
A history-changing presidential debate. Two assassination attempts. A president abandoning his pursuit of a second term.
Unexpected events during the 2024 presidential campaign have unleashed a flood of uncertainty.
But markets have tended to perform better after major elections, with small caps historically outperforming following presidential contests, according to Mike Rode, vice president at American Century Investments.
Commentators may thrive on drama, he said, but businesses and markets don’t like uncertainty.
This could be one reason that markets are typically volatile before elections, and have tended to perform better after the election.
Small-cap companies in particular, represented by the US Russell 2000 Index, have tended to outperform their large-cap counterparts in the year following a presidential election.
Rode argues that while investors may gravitate to the perceived safety of larger, more established stocks amid political uncertainty, they may be more willing to take on risk once the election is settled.
Election results can shake off some of this uncertainty because investors know who will set the country’s agenda.
“So, in our view, investors should expect the unexpected.
“But if history rhymes, we think markets could see relief from a post-election rally with small caps poised to lead the way,” said Rode.
Gold price traded flat at to US$2,659 an ounce.
Oil prices retreated almost 3% lower, with Brent crude now trading at US$73.33 a barrel.
The benchmark 10-year US Treasury yield rose by 5 basis points (bond prices lower) at 3.78%.
Bitcoin was down 1.5% in the last 24 hours to US$63,380, and Ethereum dropped by 3% to US$2,576.
Gladiator Resources (ASX:GLA)
Gladiator has announced promising findings from the Mkuju Uranium Project in southern Tanzania. A recent drill-hole at the Likuyu North deposit revealed six mineralised intervals, with one measuring 7.1 metres and averaging 1,963 ppm of uranium. This drilling aims to assess the potential for In Situ Recovery (ISR), which is the preferred method for extracting uranium. Another drill-hole also showed a mineralised interval about 100 metres south of the current resource estimate. The existing 2022 resource for Likuyu North, based on traditional open-pit methods, could potentially be expanded if ISR proves successful.
Piche Resources (ASX:PR2)
Piche has also announced strong results from the Ashburton Project in WA, with the first six drill holes at the Angelo A prospect showing significant high-grade uranium, including 6.98 metres at 1,617 ppm and 0.34 metres at 16,050 ppm. The ongoing drilling aims to confirm these findings and explore extensions of the mineralisation. This work targets uranium deposits similar to those in Australia’s Pine Creek Geosyncline and Canada’s Athabasca Basin. A diamond drill rig will be mobilised soon, and the company noted there have been no exploration activities at Angelo A for the past 40 years.
True North Copper (ASX:TNC)
TNC has announced promising results from a geophysical survey at the Mt Oxide Project in Queensland. The survey, supported by a $300k Queensland Government grant, revealed multiple unexplored targets at the Mt Gordon and Aquila prospects that show similarities to the Vero Cu-Ag-Co resource. At Mt Gordon, three new shallow anomalies have been identified, partially aligning with historic drilling that encountered 1.9 metres at 3.0% copper. Meanwhile, Aquila showed chargeability highs that correspond to iron oxide-rich breccias, with rock samples returning up to 0.94% copper. The next steps include completing the survey, sampling newly identified structures, and planning for future drilling campaigns.
Indiana Resources (ASX:IDA)
Indiana announced strong drilling results from the Minos REE Prospect in South Australia, confirming a continuous high-grade rare earth element (REE) mineralisation. The assays showed a thick zone of total rare earth oxides (TREO) in the weathering profile, with notable intersections including 35 metres at 1,215 ppm TREO and 375 ppm magnetic rare earth oxides (MREO). The target area spans 6.0 km long by 4.5 km wide and is still open in all directions. Future plans include infill drilling, metallurgical testing, and further exploration to assess this promising resource.
Iceni Gold (ASX:ICL)
Iceni has discovered a significant 4.5 km long gold anomaly at the 14 Mile Well Gold Project, situated between Leonora and Laverton. Recent aircore drilling revealed a broad bedrock gold anomaly, measuring between 160 and 640 metres wide, along the Guyer Trend. Gold mineralisation was found in multiple drill holes, with notable results including 4 metres at 0.98 g/t Au and several other significant intersections. Most of the gold hits occurred near the granite-greenstone contact, suggesting the presence of a primary gold system. There’s still 7 km of the prospective area that remains untested, with plans for further drilling to explore this promising trend.
At Stockhead we tell it like it is. While Indiana Resources is a Stockhead advertiser, it did not sponsor this article.
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