Market Highlights: Last hike? Market hopeful the Fed will pause; and a crackdown on crypto influencers
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The ASX is set to drop at the open on Thursday, tracking movements in New York. At 7.30am AEDT, the ASX 200 April futures contract was pointing down by 0.70%.
Overnight, US stocks plunged as the Fed pressed ahead with another 25bp hike (as expected), and signalled that the rate-rising cycle may not be over.
All three major US indexes – the S&P 500, Dow Jones and Nasdaq – fell by around 1.6% each.
The FOMC members voted unanimously to raise by 25bp, and in a press conference, Fed chairman Powell said:
“We are committed to restoring price stability, and all of the evidence says that the public has confidence that we will do so.”
However he calmed the markets when he added that a pause might be around the corner.
“We no longer state that we anticipate ongoing rate increases will be appropriate to quell inflation. Instead, we now anticipate that some additional policy firming may be appropriate,” Powell told a news conference.
He added rate cuts this year were “not our baseline expectation”, but a pause was being considered leading up to today’s decision.
Powell also reassured the market the US banking system is “sound and resilient” and that the latest banking crisis was “isolated”.
The Fed’s so-called dot plot, which is an outlook for the path of interest rates, showed its end of 2024 projection rising from 4.1% to 4.3%.
Analysts now believe the banking crisis has inadvertently helped the Fed move away from aggressive rate hikes.
“Nobody would have expected this a few weeks ago, but the collapse of Silicon Valley Bank and Credit Suisse may have saved the stock market from retesting the lows,” said David Russell, vice president at TradeStation.
Former meme stock Gamestop rose 40% after posting a surprise Q4 profit.
Other fellow meme stocks AMC Entertainment and Koss Corp also advanced 4% and 5.0%, respectively.
Billionaire Richard Branson’s cash-strapped Virgin Orbit surged over 50% after Reuters reported that it was nearing a $200m investment from Texas-based venture capital investor Matthew Brown.
Nike Inc dropped 2.4% despite raising its full-year revenue outlook.
Regional bank shares were back in the red following Fedspeak and Treasury Secretary Yellen’s comments that regulators are not looking to provide “blanket” deposit insurance to stabilise the US banking system.
US bond yields declined (prices increased) after the Fed decision, while Bitcoin slipped 2% in the last 24 hours to US$27,435.
A widely expected crackdown on crypto influencers appears to be finally happening.
While the violations against Lindsay Lohan, Soulja Boy and Jake Paul won’t draw serious attention, alleged fraud and unregistered securities charges against Tron founder Justin Sun were newsworthy.
The SEC has unveiled the charges against Sun for fraud and securities violations, alleging trade manipulation of two crypto tokens and celebrity endorsements that did not disclose compensation.
“Market manipulation is one part of the crypto world that still has yet to be cleaned up or even close to fully being addressed,” said Oanda analyst, Edward Moya.
In other markets, crude prices rose modestly by 0.5%, and iron ore was down -2.7% to $US120.20 a tonne.
Spot gold meanwhile rallied by 1.5% to US$1,969.38, driven by risk aversion on Yellen’s comments.
“Wall Street will have to deal with further banking turmoil and that should keep safe-haven flows coming to gold,” says Moya.
Ahead, the ABS will release Australia’s labour force data today.
Vection Technologies (ASX:VR1)
Vection has increased its FY23 Total Contract Value (TCV) metric to ~$15 million, a 50% increase vs TCV announced on 31 January. The increase is largely attributed to service agencies and new clients generated in the AEC and real estate sector. The company predicts strong outlook for FY23 ahead of its revenue guidance.
The medical imaging company reported full year FY22 revenue of $17.1m, up 28% on pcp. Annualised Recurring Revenue was $19.7m, down 4% on pcp. The company said its immediate focus is on the Latin American market, and says it is on the path to profit.
MPower Group (ASX:MPR)
MPower has established a project funding relationship with a global renewable energy investment firm to fund the growth of its solar power and battery storage projects being rolled out across Australia. The agreement will provide the company with a flexible funding solution, with the first $10 million already being executed for its clean energy project in Narromine, NSW.
Emyria says 50 patients have been successfully enrolled and over 100 patients successfully screened in a pivotal Phase 3 clinical trial to support the registration of EMD-RX5 as an over-the-counter medicine. Recruitment and dosing are expected to accelerate, supported by Emyria’s Emerald Clinics and final two sites (of a total of 9), and based in ACT and SA, to commence dosing this week.
SRJ Technologies (ASX:SRJ)
A strategic alliance agreement has been signed with Cokebusters, which aims to use each entity’s technical capabilities to develop and utilise asset integrity solutions for pipeline and pipework systems that currently are unable to be inspected effectively. SRJ and Cokebusters are now working closely to design solutions and services to monetise the combined expertise.