Market Highlights: Monster week ahead for US Fed and inflation; and 5 small caps to watch today

ASX200 expected to open lower on Tuesday; futures down -0.6pc
US stocks saw cautious gains after better-than-expected jobs data
Apple collaborates with OpenAI to bring ChatGPT to iPhone et al

The ASX 200 is poised to fall when the market opens on Tuesday. At 8am AEST, the ASX200 futures contract was pointing down by -0.6%.

Overnight, US stocks managed to eke out cautious gains following the release of better-than-expected US monthly jobs data.

Investors had been hoping for a slowdown in job growth, but according to the data, the US economy added 272,000 jobs compared to economists’ forecast of 185,000, dashing hopes of an imminent interest rate cut by the Fed Reserve.

“The interest-rate guessing game goes on,” said Chris Larkin at E*Trade.

The S&P 500 rose by +0.26%, the blue chips Dow Jones index was up by +0.18%, and the tech-heavy Nasdaq lifted by +0.35%.

Southwest Airlines jumped +7% after activist firm Elliott Investment Management urged the airlines to make significant changes in its leadership team. Elliott says these changes are necessary to address what it perceives as years of poor performance by one of the largest US airlines.

Advanced Micro Devices fell -4.5% after Morgan Stanley downgraded the stock from Overweight to Neutral, expressing concerns that investors’ expectations for the chipmaker’s AI business may be overly optimistic.

KKR, CrowdStrike, and GoDaddy are set to become new additions to the S&P 500 index as part of the latest quarterly adjustments in its weighting.

Over in Europe, stock markets mostly fell after French President Emmanuel Macron announced plans for a legislative vote following a significant defeat in the European Parliament elections.

And on Wednesday (US time), the spotlight will be on US inflation as the consumer price index (CPI) reading for May is released.

This data will come in just ahead of the US Fed’s interest rate decision, as their two-day meeting concludes on the same day.

While interest rates are expected to remain unchanged, the Fed might offer insights into the possibility of rate cuts in 2024.

“With CPI and Fed on the same day there is a possibility of a CPI outcome being reversed by Powell’s press conference,” said Andrew Tyler at JPMorgan Chase.

Apple teams up with OpenAI

Meanwhile, at the WWDC (Worldwide Developers Conference) last night, Apple officially announced its collaboration with OpenAI to introduce ChatGPT to the iPhone and other devices.

Under this partnership, GPT-4 will provide the backbone for cloud-based Apple Intelligence queries across iOS 18, iPadOS 18, and macOS Sequoia.

According to Craig Federighi from Apple, the enhanced Siri, powered by AI, will have the capability to access ChatGPT’s extensive knowledge base to assist in various tasks.

For instance, users can ask Siri for meal ideas based on specific ingredients or seek decorating advice by providing photos with specific details or colour arrangements.

The integration of ChatGPT with Apple’s system-wide writing tools will introduce a new feature called Compose. Users can use Compose, for example, to create personalised bedtime stories tailored to a child’s interests.

Apple’s share price fell -2% overnight.

In other markets …

Gold price climbed by +0.9% to US$2,311.29 an ounce.

Oil prices jumped by +3%, with Brent crude now trading at US$81.94 a barrel.

Crude’s jump was fuelled by optimism surrounding a potential uptick in fuel demand during the summer months.

Despite the US dollar strengthening and expectations of the Fed Reserve maintaining higher interest rates for an extended period, the outlook for increased fuel consumption supported the rally.

The benchmark 10-year US Treasury yield was up 1 basis point (bond prices lower) to 4.46%.

The Aussie dollar rose by +0.4% to 66.12 cents.

The iron ore price fell by -3% to US$105.40 a tonne.

Bitcoin meanwhile ticked lower by -0.22% in the last 24 hours to US$69,490, while Ethereum was also down around -1% to US$3,672.

5 ASX small caps to watch today

AIC Mines (ASX:A1M)
AIC announced that the Eloise Copper Mine has met its production targets for the fiscal year 2024. The mine has successfully produced 12,500 tonnes of copper and 5,000 ounces of gold in concentrate. AIC Mines aims to maintain this production level for the full year, targeting approximately 12,500 tonnes of copper and 5,000 ounces of gold in concentrate, with associated all-in sustaining costs (AISC) of $5.00/lb Cu, and all-in costs (AIC) of $5.20/lb Cu. The achievement of these production targets confirms Eloise’s successful performance for the fiscal year 2024.

DY6 Metals (ASX:DY6)
DY6 announced that it has received official confirmation from the Malawian Department of Mines regarding the approval of the licence area for its Tundulu project. Tundulu, located in southern Malawi, is a recognised carbonatite complex known for its enrichment in Rare Earth Elements (REE) and Niobium mineralization. Noteworthy historical drilling results at Tundulu include: 101 meters with 1.02% Total Rare Earth Oxides (TREO) and 3.6% Phosphate (P2O5) starting from the surface, and 91 meters with 1.09% TREO and 7.6% P2O5 starting from a depth of 46 meters.

Westgold Resources (ASX:WGX)
Westgold announced significant increase in its Mineral Resources at Starlight following an intensive resource definition campaign. Total Mineral Resource now 590koz post depletion, up by 41%. WGX also reported a 21% increase in Measured and Indicated Mineral Resource available for Ore Reserve studies. Mine planning works on the latest Mineral Resource are underway, and anticipated is expected to result in an increase in Ore Reserves to be reported in Westgold’s annual Mineral Resource and Ore Reserve statement.

Tower (ASX:TWR)
The Kiwi insurer has raised its earnings forecast for the year ending September 30, 2024, to over $40 million (up from the previously anticipated figure of over $35 million), citing favourable trading conditions and minimal claim costs from recent storms in New Zealand. Tower said it incurred minimal claim costs from two storms in May, which did not meet the threshold for significant events.

Australian Mines (ASX:AUZ)
AUZ reported the discovery of unusual levels of Rare Earth Elements (REE) in stream sediment samples from its Resende Lithium Project in Minas Gerais, Brazil. These REE anomalies were found near, but mostly separate from, the areas where high levels of tin, tantalum, and lithium were previously reported by AUZ on May 21. The most significant assay results revealed Total Rare Earth Oxides (TREO) levels of 2893 ppm and 1999 ppm.

At Stockhead we tell it like it is. While DY6 Metals and Australian Mines are Stockhead advertisers, they did not sponsor this article.