• The ASX is poised to open lower after a slump on Wall Street
  • Oil stocks will be in focus as Saudi and Russia extend supply cuts
  • Investors should brace for volatility to year-end – expert

 

Australian shares are set to open lower again on Wednesday as Wall Street slumped after coming back from the Labour Day break. At 8am AEST, the ASX 200 index futures was pointing down by -0.2%.

In New York, the S&P 500 was down by -0.42%, blue chips Dow Jones by -0.56%, and tech heavy Nasdaq by -0.08%.

Oil was in focus as crude prices surged 1% following a meeting by OPEC+ members in which Saudi Arabia and Russia agreed to prolong their supply cuts by another three months.

This was more aggressive than what traders had expected and US oil stocks moved higher as a result.

US Treasury yields also rose up to 8bp soon after the announcement, as traders weigh what an oil spike would mean for the economy.

In stocks, Tesla led gains in megacaps, up almost 5%, while Airbnb popped 7% and Blackstone 3.5% after both stocks were included in the S&P 500 index.

United Airlines shares fell -2.5% after the airlines grounded all US flights temporarily following a “systemwide technology issue” according to the Federal Aviation Administration.

Back home, Australia’s Q2 GDP release will be the main focus for ASX traders today.

KPMG predicts that a slowing domestic demand is anticipated to “push Australia into a stagnation economic profile for the remainder of 2023 and into the first quarter of 2024.”

 

Volatility to be the main theme for rest of year – expert

As rates are almost at their peak, investors will be keen to see whether stocks will have more room for a rally in September.

According to Greg Bassuk, CEO of AXS Investments, we should brace for volatility as there will likely be “more bumps” in the road through the end of the year.

Volatility could come from afar, as geopolitical developments have been a bit ignored this year, Bassuk notes.

“The economic slowdown in China and the ongoing Russia-Ukraine conflict have the potential to shake markets,” he added.

Bassuk said that another dynamic worth watching is whether investors continue to favour growth stocks as opposed to value stocks.

“Growth stocks, or shares of companies that tend to grow faster than the broader market, have come roaring back, and one gauge is up more than 36% this year,” Bassuk said.

“By comparison, a gauge for value stocks — or shares of companies that may be inexpensive relative to their intrinsic worth — has risen less than 4%.”

Another out-of-favour investment that Bassuk likes is real estate.

“Commercial real estate is more attractive than residential because it has been disproportionately hit hardest,” he said.

 

In other markets …

Gold fell by -0.65% to US$1,925.82 an ounce.

Base metal prices were mixed after China’s services activity expanded at the slowest pace in eight months in August.

Iron Ore 62% fe fell -0.90% to US$117.13/tonne after the China report.

The Aussie dollar plunged more than 1.4% to to US63.78c as the USD rose to a near six-month high against a basket of currencies.

Bitcoin meanwhile was flattish in the last 24 hours at US$25,741.

 

5 ASX small caps to watch today

Industrial Minerals (ASX:IND)
Several prospective HPSS targets have been identified from hand auger sampling across the Albany Project. Test results show low Fe2O3 levels for in-situ composite auger samples, providing encouragement that potential premium PV glass silica sand specification can be achieved.

Accelerate Resources (ASX:AX8)
AX8 has expanded its 100%-owned East Pilbara Lithium Strategy with the new Windi tenement acquisition which represents a substantial lithium target. Lithium target generation will commence using the same exploration model applied by GL1 at the nearby Archer Deposit (18Mt @ 1.0% LiO2).

BPM Minerals (ASX:BPM)
Moving Loop Electro-Magnetic (MLEM) geophysical survey at the IZ5 Prospect has identified three bedrock conductors. These conductors are considered indicative of massive sulphide accumulations. The project is located inland of Geraldton approximately 75km north of Mullewa in Western Australia.

Battery Age Minerals (ASX:BM8)
Summer prospecting has concluded with a total of 30 pegmatites identified including significant discovery of mineralised pegmatite in the Falcon North property located ~1.2km north of Falcon Main. A total of 30 new pegmatites have been discovered over the whole prospecting campaign, including 15 containing visible spodumene ranging from <5 to 20% content.

Belararox (ASX:BRX)
The main Environmental Impact Assessment (EIA) for the TMT project covering the Toro tenure has been approved. Toro tenure EIA is the key EIA of the nine, because it includes the authorisation of up to 8,000m of diamond drilling in addition to the upgrading of main infrastructure critical to the project, such as the campsite and primary access tracks.

 

At Stockhead we tell it like it is. While Accelerate Resources, BPM Minerals, Battery Age Minerals and Belararox are Stockhead advertisers, they did not sponsor this article.

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