• The ASX 200 is set to open flat on Wednesday
  • Wall Street swung from wins to losses as weak economic data were released
  • Ahead today, RBA governor Philip Lowe will make a speech

Local shares are set to open flat today.

Overnight, US stocks had a choppy session after a couple of weak economic data were released.

The US Manufacturing PMI (purchasing managers index) data, which is a timely indicator of business conditions, fell the most since May 2020.

In the services sector, the S&P Global PMI came in at 44.1, lower than the forecast of 49.2.

New home sales data also plunged for the month of July, confirming the cooling of the US housing market.

Wall Street swung between wins and losses but at day’s end, the S&P 500 and Dow fell by around half a per cent, while the Nasdaq ended flat.

The US$24bn market capped Zoom was the biggest moving stock, tumbling by 16% after the company reduced its annual sales forecast to about $4.4 billion from its May projection of $4.55 billion.

In the UK, the FTSE 100 index finished 0.6% lower, but it’s been up 7% since the June lows despite Citi warning that UK inflation could double to 18.6% in the coming months due to energy prices.

Meanwhile, specialist global investment consulting firm, bfinance, said that in Q2, investors have restructured their positions and prioritised inflation-resilient assets in the face rising inflation and rates.

“As inflation surges and markets fall, investors have put a strong focus on defensive portfolio positions while also looking for assets that are resilient to inflation,” said Sebastian Mays, business development manager at bfinance.

“Investors also demonstrated a keen appetite for real estate, which attracted 31% of all new searches, with strong interest also seen in private debt and private markets.”

Crude prices meanwhile have rallied by 4% overnight, taking the benchmark Brent crude to over US$100 a barrel once again.

“Crude prices are rallying as the dollar’s rally came to abrupt halt on growth concerns,” said Oanda analyst, Edward Moya.

“A weakening US economy should be bad news for oil, but today’s soft economic readings suggest that OPEC+ will easily be able to justify production cuts soon.

“The oil market will remain tight whether business activity continues to weaken sharply, or if economic growth remains choppy.”

Iron ore was up 1.6%, and Bitcoin rose 1.72% in the last 24 hours to trade at US$21,563.

Ran Neuner, founder and host of the podcast Crypto Banter, told Kitco News that the upcoming Ethereum merge will be the biggest event in crypto history since the first Bitcoin was mined.

“It could be the biggest catalyst for crypto, but it could also be the biggest catastrophe for crypto,” Neuner said.

The merge on September 1 is expected to transition ETH’s consensus mechanism from an energy-intensive proof-of-work protocol to an ESG-friendly proof-of-stake dynamic.

Later today, a speech by RBA’s official Jonathan Kearns is expected, and detailed skilled job vacancies for July will be released by the ABS.

Stocks to release earnings results today include: Airtasker, Domino’s Pizza, Tabcorp, and Wisetech.

5 ASX small caps to watch today

Elmo Software (ASX:ELO)
For the full year, Annualised Recurring Revenue (ARR) was $108.2 million, up 29% on pcp. Total revenue was $91.4 million, up 32% pcp. Elmo has released an ARR guidance for FY23 of between $134-$140 million, supported by an organic growth of 24% to 29%.

Spacetalk (ASX:SPA)
For the full year, revenue was $20.7m, up 37% on pcp. It was the first time the company had generated revenue greater than $20 million in its history. However, Spacetalk ended the year with a net loss of $6.7m, down 267% from a year earlier.

Pepper Money (ASX:PPM)
For the first half of calendar year 2022, Pepper delivered a statutory NPAT of $72.2 million, up 29% on pcp. Mortgage originations were up 48%, and assets under management grew 24% to $14 billion.

Propel Funeral (ASX:PFP)
For the full year, revenue was $145.2 million, up 20.6% on the prior year. Pro forma operating NPAT was $16.9 million, up 45% on the prior year. The company paid total dividends of 12.25 cents (FY21: 11.75 cents) per share fully franked.

Lycopodium (ASX:LYL)
The engineering company reported a revenue of $232.2m for the full year, up from $162.2m in the previous year. Net profit after tax was $27.2 million, up from $14.2m in the prior year. The company expects its financial performance in FY23 to be broadly in line with that achieved in FY22.