• Local shares are set to open higher on Tuesday
  • Wall Street fell by up tp 1%, dragged down by downbeat Chinese data
  • The RBA will make its rate call at 2.30pm today, half an hour before the Race

Aussie shares are poised to edge higher on Melbourne Cup day. At 8am AEST, the ASX 200 Dec futures contract was pointing up by 0.15%.

TAB is offering $3.50 for four-year-old gelding Deauville Legend to win the 3200m race that stops the nation.

Just half an hour before that at exactly 2.30pm, the RBA will hand down its interest rates decision.

The majority of economists are expecting a 25bp hike, but 50bp isn’t out of the question given the strong CPI print last week.

In New York overnight, major US stockmarket indices fell by up to 1% on the final day of October, with the focus turning to the Fed’s rates decision later tonight.

The Fed funds rate currently sits at the 3%-3.25% range, and most economists are unanimous that it will reach 4.4% by end of this year – which means another jumbo hike of 75bp tomorrow is not too far fetched.

China’s October PMIs released yesterday disappointed and dragged markets down overnight.

“A global manufacturing contraction is here.  Factory activity is taking a big hit as China struggles with Covid, Europe is headed towards a recession, and as the US economy finally feels the impact of inflation and Fed tightening,” said OANDA analyst Edward Moya.

Despite the lower close, the Dow Jones index capped off its best month since 1976, with the S&P 500 and Nasdaq also snapping a two-month losing streak.

Apples shares dropped 1.5% as a report from Reuters said that production of iPhones could slump by as much as 30% next year at one of the world’s biggest factories in China.

In other markets, iron ore slumped by another 3% last night to US$79.50 a tonne over concerns of China’s dwindling steel demand as the country’s property sector struggles.

Crude oil also accelerated its downhill slide, with Brent falling by another 1% to US$94.85 a barrel.

The release of the OPEC 2022 World Oil Outlook report however still supports both medium and long-term cases for higher prices.  The OPEC secretary general noted that surplus was the main reason for the recent 2 million barrel a day cut in the cartel’s production.

“OPEC still runs the show that is the oil market, and they will take necessary action to keep oil prices supported,” said Moya.

Spot gold was down 0.5% to US$1,633.40 an ounce, while Bitcoin slipped 1.5% in the last 24 hours to US$20,405.

Bitcoin continues to hover around the $20k level as Wall Street hopes for the Fed to provide clues that we are much closer to the end of tightening.

Looking ahead to today’s session: apart from the RBA’s rates call, RBA governor Phil Lowe will give a speech while CoreLogic will release its national home value index for October.
 

 5 ASX small caps to watch today

Pointerra (ASX:3DP)
During the September quarter, the 3D geospatial tech company continued to add new customers and generate growth from existing customers across most of its target market sectors in the US and Australia. ACV now totals US$20.1 million, and Transport & Mining sectors are driving US$1.9 million uplift in ACV.

Lithium Energy (ASX:LEL)
Further significant lithium concentrations have been encountered in maiden drillhole at Solaroz Lithium Brine Project in Argentina. The drillhole has now extended into a depth of ~335m, and further assay results from packer sampling of conductive brines has returned highly encouraging lithium concentrations of up to 555 mg/L.

Swoop Holdings (ASX:SWP)
The data and voice services company generated Q1 receipts of $18.6m for the quarter, an increase of $4.7m from the previous quarter and $7m over the pcp. Cash balance at 30 September was $22.4m.

Papyrus Australia (ASX:PPY)
The biodegradable food packaging company has signed phase one contracts with the Egyptian Government through its Egyptian commercial entity Papyrus Egypt. These phase one contracts cover the sale of banana fibre moulding line equipment, as well as a moulded banana fibre product offtake agreement.

Orecorp (ASX:ORR)
Orecorp says it has identified significant life of mine extension opportunities at its Nyanzaga Gold Project in Tanzania since it completed its Definitive Feasibility Study (DFS) in August. Nyanzaga has a combined open pit and underground production target defined in the DFS of 42.51 Mt @ 2.07g/t gold for 2.83 Moz contained gold providing a 10.7-year mine life.

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