• Wall Street tumbles after a speech from Fed chair Jerome Powell
  • Powell said he won’t hesitate to raise rates again if the situation calls for it
  • And what a Trump victory would mean for markets

 

Aussie shares are poised to open modestly lower on Friday as Wall Street partially gave up recent gains. At 8am AEST, the ASX 200 index futures was pointing down by -0.1%.

Overnight, the S&P 500 fell by -0.81%, the blue chips Dow Jones index was down by -0.65%, and the tech-heavy Nasdaq tumbled by -0.95%.

Speaking in Washington D.C., Fed chair Jerome Powell poured cold water on market bulls after saying he would raise rates if the data calls for it.

“If it becomes appropriate to tighten policy further, we will not hesitate to do so,” Powell said at the Monetary Fund conference where he was briefly interrupted by climate protestors.

Bond yields rallied after his speech and a disappointing 30-year treasury auction.

Peter Cardillo, chief market economist at Spartan Capital, said: “If you add up all the remarks, Powell is telling the market not to get too complacent, and that’s putting some pressure on stocks.”

Among major movers last night, Nvidia was up 1% after a report from Reuters said the company was planning to release three new chips for the China market.

Walt Disney jumped 7% on a quarterly profit beat, and as Hollywood actors’ strike appears to be over. Striking actors’ union SAG-AFTRA said it has reached a tentative agreement with studios to put down pickets after 120 days.

Arm Ltd shares plunged 5% after the company gave a disappointing guidance amid a slump in smartphone sales.

 

What a Trump win would mean for markets

The third 2024 Republican presidential debate held overnight  has captured the attention of investors worldwide.

Missing was front-runner Donald Trump, who instead hosted an event not far away, in Hialeah, Florida.

According to Nigel Green, the CEO of deVere Group, global financial markets, always focused on the intersection of politics and economics, are poised for a “dynamic response” should Trump return to the Oval Office.

“Whether you support him or not, there are both positives and negatives of a Trump re-run for markets,” Green said.

One of the key factors driving market sentiment if he returns is that his last administration was characterised by pro-business policies, such as tax cuts and deregulation, and created a bullish market environment.

“Investors responded favourably to initiatives aimed at stimulating economic growth, and a return to Trump’s presidency could reignite optimism, particularly in sectors sensitive to regulatory changes,” Green added.

However, the unpredictability associated with his governance style is a factor that may impact market dynamics.

“No question that Trump’s polarising rhetoric and divisive governance style could exacerbate domestic tensions, with potential consequences for market sentiment.

“If a Trump victory is expected to lead to a considerable increase in economic activity and inflationary pressures, the Fed could consider gradually raising interest rates again to prevent overheating and excessive inflation,” Green concluded.

 

In other markets …

Gold price rose almost +0.5% to US$1,958.01 an ounce.

10-year treasury yield jumped 10bp after Powell’s comments.

Oil prices gained +0.25%, with Brent trading at US$79.98 a barrel.

Iron ore futures traded flat at US$127.38 a tonne.

Base metals prices were mixed, with 3-month nickel futures climbing +1%, and copper futures slipping by -0.3%.

The Aussie dollar gave up the US64c handle, down -0.5% to US63.68c on the back of Powell’s hawkish tone.

Meanwhile, Bitcoin jumped over +3% in the last 24 hours to US$36,623.

 

5 ASX small caps to watch today

Neometals (ASX:NMT)
Neometals announced the successful completion of the purification phase (purification testwork) of its Lithium Chemical pilot trial. The purification testwork, conducted on a brine feed source, has confirmed earlier bench-scale testing by removing >97% of brine feed source impurities. This supports production of a purified brine solution that sits comfortably within specification for subsequent electrolysis stage of the company’s majority owned ELi process.

Black Cat Syndicate (ASX:BC8)
Surface RC drilling has commenced at Paulsens, initially targeting two prospective fault zones that host outcropping gold mineralisation. The Eastern Zone of the Paulsens mine is a ~2.5km long plunging mineralised trend sub-parallel to the Main Zone. This Eastern Zone has only seen limited drilling, despite encouraging historical results and early-stage Resources (12.7koz @ 10.81g/t Au). An initial 4-hole program (565m) is planned to test down plunge from historical surface samples that returned up to 29.7g/t Au.

Southern Cross Media (ASX:SXL)
SXL notes the report published online last night in the AFR and confirmed it has received from Australian Community Media (ACM) a non-binding indicative conditional proposal involving the merger of SXL and the regional publications and digital assets of ACM. ACM’s proposal was unsolicited and involved SXL acquiring assets from ACM in return for the issue of new shares in SXL. SXL said it will consider ACM’s proposal with its advisers to assess whether it would be in the interests of SXL and its shareholders.

Estrella Resources (ASX:ESR)
A new, extensive field of multiple, stacked pegmatites was discovered during recent field investigation into the eastern side of the Carr Boyd tenements. Fractionated pegmatites up to 16m width were observed on surface within a 16km2 area east of the Carr Boyd Rocks monzogranite. Targeted mapping and rock-chip sampling programs of both pegmatite fields has now commenced.

Genex Power (ASX:GNX)
Further to its announcement on 30 October, Genex now says it has now completed the facility commissioning for the 50MW/100MWh Bouldercombe Battery Project (BBP), enabling the immediate commencement of operations. The Project will initially operate utilising 38 of the 40 Megapacks supplied by Tesla Motors Australia. This has allowed Genex to grant “Facility Commissioning Completion” to Tesla under the Supply Agreement between the parties, marking the end of the construction phase, with the two replacement Megapacks to be procured, installed and commissioned by Tesla as punch list items.

 

At Stockhead we tell it like it is. While Black Cat Syndicate is a Stockhead advertiser, it did not sponsor this article.

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