• ASX to rise as tech stocks tumbled in New York
  • US microchip stocks sold off after government imposed new export rules to China
  • Morgan Stanley says it’s time to buy 10-year bond after yields surged again


Aussie shares are poised to open higher despite US tech stocks reversing late in the day. At 8am AEST, the ASX 200 index futures was pointing up by +0.2%.

In New York, the S&P 500 and blue chips Dow Jones index closed flat, while the tech-heavy Nasdaq dropped by -0.25%.

The late selloff was triggered by Nvidia’s announcement that the US government was restricting shipments to China of more advanced artificial intelligence (AI) chips designed by Nvidia and other US chipmakers.

Nvidia shares fell -5%, while other chipmakers like Advanced Micro Devices and VMware also slipped on the news.

General Motors was flat after the company said it was delaying its electric vehicles production plan.

To corporate earnings, Goldman Sachs fell -1.5% after reporting a 33% slide in profit. Bank of America advanced 2.5% after profit beat estimates, and its trading desk reporting their best Q3 in a decade.

Earnings season is still in early days, but there are signs corporate America may have turned the corner. Tesla and Netflix will be reporting their results later today (US time).

Market sentiment meanwhile was boosted after US retail sales data smashed expectations, rising by 0.7% in September which was more than double Wall Street’s estimates.


Time to buy 10-year bond, says Morgan Stanley

Overnight, the 10-year US bond yields leapt 13bp to 4.84%, while 2-years rallied to 5.22%.

Jim Caron at Morgan Stanley Investment Management believes it’s time to add duration to your bond portfolio, ie; moving to more long dated bonds.

“Get long of bonds? No. Add duration? Yes. There is a big difference,” Caron said.

“As bond yields move close to 5% for the UST 10-year, we think this is a good opportunity to reduce the underweight and add duration to portfolios.”

Caron said with UST 10-year yield around 4.8% right now, it’s starting to trade slightly cheap to a no-landing scenario in Morgan Stanley’s estimation.

A “no landing” scenario is when the economy continues to grow above normal, while the unemployment rate stays low, and inflation cools to the 2% target and stays there.

“We still maintain a small overweight to equities and are looking for an opportunity to buy the dip. We will take our cue from changes in bond yields,” says Caron.

(Note that bond prices rise as bond yields fall.)


In other markets …

Oil prices surged another 1% as the war escalated in Palestine, with hundreds reportedly killed at a Gaza hospital. Brent is now trading at US90.87 a barrel.

Gold price rose slightly by +0.2% to US$1,922.98 an ounce.

Iron ore futures also lifted by +0.05% to US$119.31 a tonne.

Base metals prices were stronger, with nickel futures rising by +0.3%, and copper futures by +0.35%.

The Aussie dollar gained another +0.3% to US63.67.

Bitcoin meanwhile jumped 0.6% in the last 24 hours to US$28,535.


5 ASX small caps to watch today

AFT Pharmaceuticals (ASX:AFP)
AFT announced it has been notified overnight that the US FDA has approved Maxigesic IV, the intravenous form of its patented pain relief medicine, for sale in the US, which represents AFT’s second FDA approval within one year. The event will trigger a milestone payment of US$6 million to AFT from the US licensee of the medicine Hikma Pharmaceuticals. AFT is entitled to 65% of this under its profit share arrangements with Hyloris. AFT also qualifies for a US$2.9 million reimbursement of regulatory fees paid to the FDA for Maxigesic IV that it expects to receive in the current financial year.

Noxopharm (ASX:NOX)
New data shows SOF-VAC, Noxopharm’s proprietary asset, significantly reduces mRNA-driven inflammation in animal model. In the animal study, inflammation was reduced by around 50% when comparing the inflammation induced by mRNA alone to mRNA plus SOF-VAC. This is an important finding, as many side effects of mRNA vaccines are due to inflammation, says NOX.

Galileo Mining (ASX:GAL)
Drill results at Jimberlana South prospect have highlighted emerging targets. New near surface target zones identified include: 52 metres @ 0.29g/t 3E1, 0.15% Cu, and 0.12% Ni from 8m, and 28 metres @ 0.34g/t 3E, 0.20% Cu, and 0.14% Ni from 32m within fresh rock sulphide zone.

Prospect Resources (ASX:PSC)
PSC reported significant new discovery from the Phase 3 diamond drilling programme at its Step Aside Lithium Project in Zimbabwe. Two scout drill holes returned wide intercepts of strongly mineralised pegmatite from shallow depths. Hole CDD055 has returned assays showing 23.08m @ 1.03% Li2O from 45m, including 11m @ 1.51% Li2O from 54m.

Black Cat Syndicate (ASX:BC8)
BC8 provided an update on underground diamond drilling at the 100% owned Paulsens Gold Operation. Results include: 0.24m @ 90.10g/t Au from 31.42m, 0.58m @ 11.80g/t Au from 43.08m, and 1.06m @ 5.54g/t Au from 28.33m.


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