• British PM Liz Truss quits, paving the way for Boris Johnson to come back
  • Wall St fell overnight on higher rates outlook
  • Yen breached 150 for the first time in 30 years

 

Local shares are set to fall on Friday, tracking the losses in New York. At 8am AEST, the ASX 200 Dec futures contract was pointing down by 0.40%.

Overnight, Wall St fell again as S&P 500 tumbled by 0.80%, the Dow Jones by 0.3% and tech heavy Nasdaq by 0.6%.

US bond yields keep rising, up by another 11bp to its highest since 2008 as Philadelphia Fed Boss Patrick Harker warned that rates are likely to go well above 4% this year.

At the moment the Fed funds rate is sitting at 3%-3.25%.

UK gilt yields also rose following the resignation of British PM Liz Truss after just 45 days in office as her Conservative Party descended into chaos.

Russia welcomed Truss’ departure, with comments from their foreign ministry spokeswoman: “Britain has never known such a disgrace of a prime minister.”

Nigel Green of deVere Group Consulting says: “Investors know that the political chaos that has defined the UK throughout 2022 is nowhere near over, and this fuels uncertainty and drives turbulence in financial markets.”

Boris Johnson is now apparently plotting a return to power from his hideout in the Dominican Republic, and will seek to replace Truss.

The FTSE 100 rose just 0.27% after the news while the Sterling dipped slightly.

Brent crude continues to climb, up by half a percent to last night to US$92.7 after President Joe Biden confirmed the release of the final 15 million barrels from the US strategic reserves.

“Brent seems to now be settling into a new range, perhaps between $90 and $100, a level most may be relatively comfortable with,” said OANDA analyst Edward Moya.

In currency news, the Yen has breached 150 against the dollar for the first time in more than 30 years, as the BoJ was forced to conduct unscheduled JGB purchases in order to defend its yield curve target.

The AUD on the other hand is on course for its weekly gain after jumping to US63.5c overnight before pulling back to US62.85.

Bitcoin meanwhile was down half a percent to US$19,070 and continues to fluctuate around the $20,000 level.

 

5 ASX small caps to watch today

Cash Converters (ASX:CCV)
CCV will acquire the Cash Converters New Zealand Master Franchisor. CCV currently holds a 25% equity interest in all aspects of the New Zealand enterprise and will acquire the remaining 75% interest for a purchase price up to $15.5m. This will be funded using the company’s available cash reserves.

Strickland Metals (ASX:STK)
Strickland intends to spin out its Western Australian Earaheedy Basin Iroquois Project and Bryah Basin Project, targeted for the first quarter of 2023. Both projects will be held by a wholly owned subsidiary of Strickland (DemergerCo), which will seek to list on the ASX.

Mt Monger (ASX:MTM)
Detailed assays have confirmed significant gold intersections in drilling at Mt. Monger Project. Significant intersections include: 7m @ 3.12g/t Au from 48m, and 4m @ 1.50g/t Au from 45m.

GBM Resources (ASX:GBM)
GBM has executed a $25m farm-in agreement with Newcrest Operations, a subsidiary of Newcrest Mining, to advance its Mount Coolon Gold Project in the Drummond Basin in Qld. This farm-in agreement provides the potential for substantial funding to advance exploration on the known mineral resources together with the other targets in the Mount Coolon Project area, while allowing GBM to focus its efforts on its highly prospective Twin Hills and Yandan Gold Projects.

Deep Yellow (ASX:DYL)
The uranium explorer provided an update on its two- stage, 10,000m follow-up RC and core drilling program at the Omahola Project. Best results from shallow drilling were identified at MS7 west and include: 29m @ 189 ppm eU3O8 from 33m, and 28m @ 190 ppm eU3O8 from 36m.

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