Market Highlights: Nvidia, gold, oil all surge as Powell says time has come for a rate cut

The ASX s expected to rise after the Fed suggested a possible rate cut in September
Nasdaq soared by 2.64pc, with Nvidia surging by 12pc
Gold and oil prices also surged due to geopolitical tensions

The ASX200 index is expected to climb when the market opens on Wednesday, after the US Federal Reserve indicated that a rate cut in September is a possibility.

At 8am AEST, the ASX200 futures contract was pointing up by 0.2%.

Overnight, the S&P 500 closed the day up by 1.58%, the blue chips Dow Jones index lifted by 0.24%, and the tech heavy Nasdaq surged by 2.64%.

Fed Reserve Chair Jerome Powell hinted at the possibility of the central bank’s first rate cut in four years, pointing to improved inflation rates and a more tempered job market that no longer risks overheating the US economy.

Despite this, the Fed maintained its key cash rate at 5.3%, the highest level in 23 years, even as pressure mounts from some economists and Democratic politicians for an immediate cut.

Powell noted that if inflation continues to decline, a reduction in the policy rate could be considered at the Fed’s next meeting on September 17-18.

“We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate, but we’re not quite at that point,” Powell said.

However, Powell offered little insight into how many rate cuts the Fed might implement in the months ahead.

“I can imagine a scenario in which it would be everywhere from zero cuts to several cuts by the end of this year,” he said.

Nasdaq stocks rallied the most as investors digested his comments. Nvidia surged by 12%, recovering from a sharp decline the previous day in the wake of soft results from other megacaps.

Meta Platforms climbed over 2.5% and a further 7% post-market following the release of its second-quarter earnings, which exceeded forecasts for both revenue and earnings per share.

Global chipmaker Advanced Micro Devices rose 4.5% as its data centre revenue more than doubled year-over-year to reach a record high, driven by a surge in AI demand.

Meanwhile, billionaire Bill Ackman’s Pershing Square has pulled its plans for a US closed-end fund IPO due to complications that impeded the eagerly awaited listing.

“This is not normal,” one banker involved in the deal told FT. “To Bill’s credit he was trying to do something very different and obviously it didn’t come together the way he wanted here.”

Gold and oil spike

Elsewhere, gold futures reached an intraday high of US$2,481.40 per ounce following the comments from Powell.

The precious metal was already gaining earlier in the day due to rising geopolitical tensions in the Middle East.

Powell’s remarks in the afternoon led investors to anticipate lower interest rates, which enhance gold’s appeal.

Oil prices also surged following the assassination by Israel of one of Hamas’ leaders in an airstrike, which heightened geopolitical tensions.

Brent crude rose by 4% to surpass US$81 a barrel, while the US benchmark West Texas Intermediate (WTI) rose 5% to above US$78 a barrel.

“Unless oil and gas infrastructure is hit, the latest spike is unlikely to last,” said Gaurav Sharma, an independent oil analyst in London.

In other markets…

Gold price rose by more than 3% before paring gains to climb just 1.5% to US$2,447.50 an ounce.

Oil prices were up by around 4%-5%, with Brent crude now trading at US$81.41 a barrel.

The benchmark 10-year US Treasury yield tumbled by 10 basis points after Powell’s comments (bond prices higher) to 4.03%.

The Aussie dollar lifted modestly by 0.10% US65.47 cents.

The iron ore price climbed by 2.5% to US$101.55 a tonne.

Bitcoin meanwhile dropped 2.5% in the past 24 hours to US$64,710 while Ethereum also slipped by 2% to US$3,222.

5 ASX small caps to watch today

Strike Energy (ASX:STX)
Strike has finalised a $48.5 million deal with Clarke Energy for 20 4.5 MW Jenbacher gas engines, essential for its South Erregulla peaking gas power plant. This fixed-price contract fits within Strike’s budget estimates and ensures timely delivery and commissioning of the engines. Jenbacher engines have a solid track record in Australia and the UK, and this contract secures key fabrication and delivery schedules, targeting an October 2026 start-up. The payment terms are mostly based on engine delivery, with Clarke Energy also providing commissioning support.

Avita Medical (ASX:AVH)
Avita has entered into an exclusive agreement with Regenity Biosciences to develop and distribute a new collagen-based dermal matrix for wound care, following FDA 510(k) clearance. This product will be manufactured by Regenity and marketed by AVITA under its brand name. AVH says the new dermal matrix aims to improve wound care outcomes by enabling faster healing and may set a new standard of care when combined with Avita’s RECELL technology. Once cleared, Avita plans to conduct clinical studies to evaluate the effectiveness of the dermal matrix alongside RECELL, with results expected in 2025.

TechGen Metals (ASX:TG1)
TechGen has announced the start of an exploration update for its Sally Downs Copper and Nickel Project, located 10 kilometres south of the Savannah Nickel, Copper, and Cobalt Mine in WA. The survey, covering 650 line kilometres with 200-metre spacing, aims to identify bedrock conductors that will guide future drilling. The project benefits from excellent access and nearby infrastructure, positioning TechGen to explore potential sulphide, intrusive, and shear-hosted mineral deposits effectively.

White Cliff Minerals (ASX:WCN)
WCN has completed the first phase of its 2024 field programs at the Great Bear IOCG-U Project in the Northwest Territories and the Rae Cu-Ag-Au Project in Nunavut. The work confirmed widespread surface mineralisation and set the stage for future drilling. At Great Bear, four IOCG systems were identified, including significant chalcopyrite and silver mineralization. Over 175 samples were collected, with follow-up campaigns planned for the northern part of the project. At Rae, extensive copper mineralisation was observed across multiple targets. Around 100 samples were gathered, and assay results are expected in two to three weeks. Additionally, a comprehensive geophysical survey was completed for both projects, with results due shortly.

Lincoln Minerals (ASX:LML)
Lincoln has unveiled a phased development strategy for its Kookaburra Graphite Project (KPG) aimed at establishing Australia’s first new graphite mine. The plan, which builds on previous work, is designed to ensure strong returns even if graphite prices remain low. The strategy capitalises on KGP’s advantages, including high-grade surface ore, an existing mining license, and nearby infrastructure such as power, water, and roads. These factors help reduce capital costs and accelerate the timeline to start production. Lincoln expects to finalise the updated Pre-Feasibility Study (PFS) by the fourth quarter of 2024. This study will build on the 2017 Feasibility Study and aims to demonstrate that KGP can achieve low operating costs and high margins.

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