Market Highlights: Powell speaks, ECB joins 75bp club, and 5 ASX small caps to watch on Friday

The ASX will open higher on Friday
Fed’s Powell warns of more rate hikes
ECB makes a historic 75bp rate increase

Local shares are set to open higher today. At 8am AEST, the ASX 200 September futures contract is pointing up by 0.10%.

Thousands gathered in front London’s Buckingham’s Palace to mourn the death of Queen Elizabeth II, who at 96 was Britain’s longest serving monarch. King Charles III has now taken the throne.

On Wall Street, all three major stock market indices rose by 0.60% each following a late surge.

Banks and healthcare stocks led despite Fed Chairman Jerome Powell’s remarks that he will stick to the script of fighting inflation hard.

Speaking at the Cato Institute’s Monetary Conference in Washington, Powell said:

“We need to act now, forthrightly, strongly as we have been doing. My colleagues and I are strongly committed to this project and will keep at it.”

ING Bank says Powell will deliver another 75bp rate hike come September 21, but believes the chances of a rate cut in 2023 remains high.

“We are currently pencilling in a rate cut in June with further easing through the second half of 2023,” said ING’s note.

The European Central Bank (ECB) meanwhile delivered a historic record 75 basis-point rate increase, and signalled that more hikes are coming over the next several meetings.

“Money markets are telling us that even as the euro zone is headed towards a recession, the ECB will be raising rates over the next few meetings,” said OANDA analyst, Edward Moya.

In other markets, Brent crude was trading higher at US$88.50 a barrel as traders shrugged a US government (EIA) report showing a big weekly increase in domestic crude supplies.

“The crude demand destruction driven oil price collapse might have found a floor,” said Moya.

“Energy traders have mostly priced in the Chinese Covid shutdowns and demand concerns from aggressive tightening signals by the ECB and Fed.”

At 8.30am AEST, Bitcoin is trading steady at US$19,330 despite Powell’s comments overnight that he would like to see more regulation around unbacked crypto assets – noting they’re not a great store of value and people don’t want to use them to make payments.

And looking ahead today, Australian skilled job vacancies data is due to be released.

5 ASX small caps to watch today

Fonterra (ASX:FSF)
Fonterra announced it has revised its 2023 forecast earnings guidance to 45 to 60 cents per share, up from 30 to 45 cents per share. It has also revised its forecast milk collections for the 2022/23 season down from 1,510 million kgMS to 1,495 million kgMS.

Ardea Resources (ASX:ARL)
Ardea released a strategy update, saying that its priority is the development of the KNP Goongarrie Hub as a globally significant critical minerals operation focussed on nickel-cobalt.

Adherium (ASX:ADR)
The respiratory eHealth company announced a partnership agreement with Dulcian Health to deploy the Hailie platform enabling doctors and medical groups in the US to access reimbursement for remotely monitored patients who are prescribed asthma and COPD medications.

Pancontinental (ASX:PCL)
Pancontinental Energy’s 66.67% subsidiary, Pancontinental Namibia, has decided to withdraw from the process of seeking an extension to the original PEL 37 Licence offshore in Namibia. Pancontinental has held the licence since 2011. The company said it has not been able to reach an agreement with the remaining joint venture partner on a way forward.

Tower Ltd (ASX:TWR)
The insurance company announced a new partnership agreement with real estate group, Ray White. The the two businesses will offer Tower’s insurance products and digital customer experience to Ray White’s customers via its new Concierge insurance.