• The ASX is poised to open higher on Monday, tracking Wall Street’s moves
  • ExxonMobil reports record profits
  • The Fed and RBA will make rates decisions this week


The ASX is poised to open higher on Monday, tracking Friday’s gains in New York. At 8am AEST, the ASX 200 May futures contract was pointing up by 0.75%.

Major US indices rose around 0.8% after a mixed round of economic data locked expectations for the Fed to deliver just one more rate hike this week.

The Fed Reserve’s favoured measure of inflation, the PCE, slowed substantially to 4.6% (from 5.1% the previous month), but was still higher than the consensus forecast of 4.5%.

The print however provides relief to the US central bank as it mulls another rate hike, with the market now comfortably pricing in a 25bp rate hike for the May 3 meeting.

Stocks also rose as concerns of a banking contagion eased after the Federal Deposit Insurance Corp (FIDC) asked major banks including JPMorgan Chase, Bancorp and Bank of America to submit final bids for First Republic Bank.

Bank of America seemed to be the front runner and may be considering whether to proceed with a formal offer, but it was JPMorgan which came up with an offer.

ExxonMobil reported a doubling in profits for the first three months of this year, helped by the increased global demand for oil and gas. The US energy firm said cost-cutting measures also contributed to its record US$11.4bn profit in Q1, up from US$5.5bn a year earlier.

Overall, the start of the US earnings season has been particularly strong, led by solid Big Tech results last week. According to FactSet, around 80% of S&P 500 companies that reported earnings so far have beaten estimates.


In other markets…

Crude prices rose over 2% on Friday after the positive earnings results from energy firms. US data also showed crude output was declining, while fuel demand was growing.

Gold and silver prices were a bit weaker following the hotter than expected inflation print, with spot gold trading now at US$1,991.85 an ounce.

“Gold probably won’t be benefitting that much from safe-haven flows on banking jitters, but it should rally if the Fed is comfortable enough to signal they are reading to hold rates for a while,” said Oanda analyst, Edward Moya.

Bitcoin meanwhile was up 0.75% in the last 24 hours to US$29,425.

The crypto market is struggling for a fresh catalyst as the banking crisis looks like it might very well end with First Republic Bank.

“The Fed will protect the banks and that should mean the recent trend of crypto strength on banking woes is coming to an end,” said Moya.

Recent data shows that Bitcoin’s daily transaction reached a new high thanks to rising Ordinals inscription, which has now reached more than 2.5 million. The Ordinals protocol allows users to make individual satoshis unique by attaching extra data to them.


RBA decision tomorrow

Back home, eyes will focus on the RBA meeting on Tuesday as investors look to see if the central bank will keep rates on hold once again.

Quarterly inflation data last week showed inflation has eased from its peak, coming in at 7%.

“This reading offered no real surprises from what the RBA already knew after pausing in April, scaling back expectations for another rate hike this week,” said Josh Gilbert, market analyst at eToro.

However, Gilbert said another increase can’t be ruled out, with inflation still way above the RBA’s target rate of 2-3%.

“One look overseas shows that fighting inflation is no easy task, and that is something the RBA has to consider.”

But the bottom line is that the RBA had put rates on hold last month to give itself some time to breathe while assessing the state of the economy after its huge tightening cycle.

“Given that this data didn’t throw up any shocks, the market would be surprised by a hike this week,” Gilbert added.

The Aussie money market is pricing in virtually no rate change from the current interest rate of 3.6%, and only a 32% chance of a 25bp hike by August.


5 ASX small caps to watch today

Halo Food (ASX:HLF)
Halo says its wholly owned subsidiary Keytone has signed a manufacturing agreement with Fonterra Brands NZ worth NZ$6.4m over two years. Under the deal, Keytone will manufacture nine milk powder SKUs for Fonterra which will be distributed in multiple countries including China, India, Vietnam, and New Zealand. The finished products will be manufactured in Halo’s New Zealand manufacturing facilities.

Immutep (ASX:IMM)
Immutep announced it has received regulatory approval in Germany to initiate INSIGHT-005, an investigator-initiated, open-label Phase I trial evaluating the safety and efficacy of eftilagimod alpha (efti), in combination with BAVENCIO (avelumab) in up to 30 patients with metastatic urothelial carcinoma. Urothelial carcinoma is the world’s most common type of bladder cancer.

Cash Converters (ASX:CCV)
For the quarter, CCV’s gross loan book was up 31% on pcp to $268m. There was significant growth across all loan books, in particular the larger longer-term products. The company had closing cash balance of $59.8m, which it said would ensure the business remains well funded to continue to meet growing credit demand.

Mandrake Resources (ASX:MAN)
Mandrake has completed the regional component of its lithium leasing programme at the 100%-owned, large-scale, Utah Lithium Project, securing a largely contiguous land package encompassing most of the Lisbon Valley. A total of 356km2 of prime lithium ground has been successfully secured which constitutes a large-scale potential world-class project. Mandrake is fully funded with $18.3m in cash, and says it will continue with more targeted leasing in the area as and when they present.

Perenti (ASX:PRN)
Perenti announced that its subsidiary African Underground Mining Services has been awarded a new, circa $630 million, 60-month contract at the Newmont Subika underground gold mine in Ghana. The term of the contract is effective from 1 January this year. In addition, under the terms of the new contract, Newmont will acquire the current fleet of underground equipment associated with the project and will also be responsible for the acquisition of additional fleet as required for the project.