• ASX set to fall despite a modest rally on Wall Street
  • Microchip stocks fell as Microsoft unveiled its new custom AI chip
  • Janus Henderson says investing in dividend stocks won’t always be a sure thing

 

Aussie shares are poised to open lower on Thursday despite Wall Street extending its gains overnight. At 8am AEDT, the ASX 200 index futures was pointing down by -0.2%.

In New York, the S&P 500 rose by +0.18%, the blue chips Dow Jones index was up by +0.47%, and the tech-heavy Nasdaq climbed by +0.07%.

US traders combed through a bunch of economics data including retail sales, which beat estimates for October but still couldn’t avoid a drop from September.

Treasuries fell (bond yields higher by 10bp) as traders took profits on yesterday’s big gains.

To stocks, big box retailer Target Corp surged 18% after its Q3 earnings smashed estimates.

Semiconductor stocks like Nvidia, AMD and TSM all fell after Microsoft launched its first custom AI powered chip, the Maia 100. Microsoft shares closed flat, but the company is now on par with its peers Google and Amazon which have also developed their own custom chips for their cloud platforms.

Media stock Sirius XM jumped as much as 12% after Warren Buffett’s Berkshire Hathaway said it has purchased a new stake in the company.

Also trending higher were Chinese stocks Alibaba and JD.com, after JD reported a Q3 earnings beat.

Meanwhile China’s President Xi has met with Joe Biden last night, and said,” For two large countries like China and the United States, turning back on each other is not an option.”

 

Why dividend stocks are ‘not always a sure thing’

The latest Global Dividend Index by Janus Henderson Investors reveals a 0.9% dip in global dividends, or a decline of around US$421.9 billion in Q3 2023.

Australia’s mining sector, whose dividends vary with the commodity cycle, contributed heavily to the reduction, although, beneath the surface, there is a growth story.

BHP, the world’s largest dividend payer in 2021 and 2022, saw its final 2023 dividend cut by more than half year-on-year. Cuts at Fortescue Metals and Rio Tinto also weighed on the global reduction in dividends over the quarter.

One-fifth of Australian companies in the index made a cut year-on-year, leading to a one-sixth decline in Australian dividends (-17.5%).

Australian banks, meanwhile, each increased their dividends by around 14% year-on-year, and a strong contribution from the oil sector (+19% YoY) also eased some of the decline.

Matt Gaden, head of Australia at Janus Henderson Investors, said the tougher market conditions for Australian and global miners masked an otherwise positive third quarter with almost every other sector seeing dividend growth.

“Investors often seek refuge in high dividend-yielding companies, or sectors such as mining and banks, but it’s not always a sure thing,” Gaden said.

“The findings of our dividend index reinforce why global diversification is critical for Australian investors that are often dependent on dividends for income generation.

“This has become ever more important as the cost of food, fuel, housing and energy soars.

“Investors must grasp the nuances of dividends, their advantages and the potential risks tied to high dividend-paying shares for a successful investment strategy,” he concluded.

 

In other markets …

Gold price fell -0.2% to US$1,959.55 an ounce.

The benchmark US 10-year treasury yield fell 10bp to 4.53%.

Oil prices were down -2%, with Brent trading at US$80.97 a barrel.

Iron ore futures was up 0.4% to US$129.25 a tonne.

The Aussie dollar was flat at US65.08c.

Meanwhile, Bitcoin roared back by +6.5%% in the last 24 hours to US$37,642.

“Bitcoin is going mainstream, and the bear is behind us,” Charlie Morris, founder of investment advisory firm ByteTree, said.

“The good times are here.”

 

5 ASX small caps to watch today

Xanadu Mines (ASX:XAM)
Xanadu provided an update on its  exploration drilling currently underway at the Kharmagtai Project in Mongolia. New discovery drilling has intersected mineralisation across multiple largely unexplored porphyry clusters, including high-density stockwork, breccia and gold only mineralisation. Best results include: 1080m at 0.21% eCu from 491m. Multiple new broad zones of gold-rich tourmaline breccia mineralisation meanwhile were delivered over a 2km strike.

Tyranna Resources (ASX:TYX)
Drilling at Muvero continues, with numerous intersections of spodumene-bearing pegmatite. Drill-holes MRC01 to MRC10 were completed, for a total of 1,650m to date. The amount of drilling at Muvero will be increased from 6,000m to 8,000m or more and continue through to 2024, in addition to drilling at other prospects.

Noxopharm (ASX:NOX)
Noxopharm has received a $6.052 million rebate under the Australian Government’s Research and Development Tax Incentive scheme, for expenditure during FY 2023. Noxopharm CEO Dr Gisela Mautner said: “We are rapidly advancing our Chroma and Sofra pipeline, and have made significant progress on both fronts over the past 12 months as we continue to transform the company. We welcome the Federal R&D rebate as it helps companies like us grow our assets, develop intellectual property, and contribute to Australia’s economy.”

INOVIQ (ASX:IIQ)
INOVIQ presented at the Bell Porter Healthcare Conference this morning. The biotech reiterated its deep pipeline for detection of common and deadly cancers. The company said it’s focused on the next-generation diagnostic and exosome solutions, and has cash of $6.3m as at 30 Sep to fund operations and pipeline development.

Summit Minerals (ASX:SUM)
Geochemical soil survey will commence next week at the Phillips River Lithium Project in WA. The program aims to define potential pegmatite-hosted lithium mineralisation. The survey will cover several intrusive bodies interpreted from the company’s high-resolution magnetic survey. The initial soil sampling programs will enable high-priority targets to be identified and enable a potential drilling campaign in 2024.

 

At Stockhead we tell it like it is. While Summit Minerals is a Stockhead advertiser, it did not sponsor this article.

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