• ASX to open modestly lower as US markets were closed for July 4 holiday
  • European stock markets were mainly higher
  • Analysts say be careful about the rally in US stocks

 

Aussie shares are set to open lower on Wednesday as Wall Street was closed for the July 4 holiday. At 8am AEST, the ASX 200 index futures was pointing down by -0.12%.

Overnight, European stock markets edged higher, with gains in real estate and travel & leisure related stocks.

Investors meanwhile have their eyes locked cautiously on Friday’s US non-farm payroll data for clues on the trajectory of the Fed’s monetary policy. The Fed will release its FOMC minutes on its June policy meeting later today.

Analysts are becoming increasingly wary about the pace of the US stock market rally this year.

Citigroup notes that the S&P 500’s rally looks “very extended”, while Goldman says that it’s too early to dismiss the risk of higher interest rates weighing on stocks.

Pictet Asset Management meanwhile said there is a gap between companies’ earnings expectations and leading economic indicators.

“Either the economy will rebound, which we think unlikely, or equities will reprice.”

 

In other markets …

Crude oil prices rose almost 2% overnight, with WTI trading at US$71.05 a barrel.

The rally came as oil traders weighed August supply cuts by top exporters Saudi Arabia and Russia against a weak global economic outlook.

“Investors are turning upbeat as the second half of the year kicks off; they expect tighter oil balance and buoyant equities also suggest that recession will be avoided, albeit probably narrowly,” said PVM analyst Tamas Varga.

Gold ticked modestly higher by 0.25% to US$1,926.30 an ounce.

Propping up bullion over the last few days is the inverse spread between the 2-year and 10-year US Treasury note yields, which has hit the widest since 1981. A negative spread is usually a leading indicator of a recession.

Meanwhile, Bitcoin dropped by 1% in the last 24 hours to US$30,791.

Bitcoin has rallied more than 80% this year, and a lot of miners are using the higher price to liquidate mined coins while the price is higher.

According to analytics firm Glassnode, the percentage of miner revenue sent to exchanges hit all-time highs in the past few weeks.

 

5 ASX small caps to watch today

Greenstone Resources  (ASX:GSR)
Global Resource (Indicated & Inferred) at Coolgardie Mining Centre has increased by 57%, including: Burbanks: 6,052,889t @ 2.4g/t gold for 465,567 ounces of contained gold (+68%), and Phillips Find: 732,960t @ 2.3g/t gold for 54,567 ounces of contained gold (unchanged).

Red 5 (ASX:RED)
Gold miner Red 5 has delivered 102,572 ounces for the half-year to 30 June following a bumper June quarter performance. The company reported strong quarterly production of 61,705 ounces, which sees Red 5 achieve the top end of its H2 guidance of 90,000-105,000oz, with AISC expected to be within guidance of $1,750-1,950/oz.

Dynamic Metals (ASX:DYM)
Up to 2000 soil samples are to be taken as part of reconnaissance exploration program on recently granted E15/17211 at Pioneer Dome, highly prospective for Lithium-Caesium-Tantalum pegmatites. The tenement covers 20km of highly prospective strike along the western side of Essential Metals’ (ASX: ESS) Dome North lithium project which hosts a Mineral Resource of 11.2Mt @ 1.2% Li2O2.

Black Canyon (ASX:BCA)
Reconnaissance sampling over the Wandanya tenement (BCA 100%) has delivered high-grade surface rock chip samples up to 54% manganese (Mn). Two samples taken 100m apart (across strike) returned 52.9% and 54.3% Mn from an outcrop that is approximately 300m long and 150m wide at the W2 prospect. Other samples targeting manganese across the tenement ranged between 12.2% and 33.5% Mn.

Alkane Resources (ASX:ALK)
Tomingley has delivered against its upgraded FY23 guidance, in a year that also saw the Tomingley Gold Extension Project approved, and the underground exploration drive arriving at the Roswell deposit, ~3km south of Tomingley. FY23 gold production was 70,253oz (guidance 65,000oz to 73,000oz). FY24 production guidance for Tomingley will be included in the June Quarterly Report to be released later this month.

 

At Stockhead we tell it like it is. While Greenstone Resources and Dynamic Metals and are Stockhead advertisers, they did not sponsor this article.

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