• Markets pulled back after a strong week
  • Bitcoin is trading above US$70k again
  • And which has more undervalued opportunities, Aussie small caps or American ones?

 

The ASX is set to open lower on Tuesday in line with Wall Street. At 8am AEDT, the ASX 200 index futures contract was pointing down by -0.3%.

Overnight, stocks in New York pulled back after a strong week of trading. The S&P 500 fell by -0.31%, the blue chips Dow Jones index was down by -0.41%, and tech-heavy Nasdaq slipped by -0.27%.

Amongst the headlines was Boeing, which rose +1.5% after firing its CEO, Dan Calhoun, following recent mishaps.

Advanced Micro Devices and Intel both slipped around 1% after a story published on the FT said China would phase out the use of their chips in government computers.

New IPO stock Reddit popped another 30% on no specific news after rising by 40% on its first day of trading last week. In its S-1 IPO filing, Reddit explicitly acknowledged the risk of becoming a meme stock, citing stocks such as GameStop and AMC Entertainment.

Bitcoin meanwhile rose another +6% in the past 24 hours to US$70,005.

A report by 10x Research said that Bitcoin tends to perform well during US election years – and 2024 is one – historically rising by 100%-200%.

 

Do Aussie small caps punch more above their weight than American ones?

The US small cap sector might offer greater depth and diversity, but Australian small caps present distinct advantages for investors seeking value and growth – according to Datt Capital.

Datt says that while the US market is undeniably deeper and more mature compared to its Australian counterpart, the Aussie small cap market remains under-researched, and this inefficiency can present unique opportunities for astute investors to uncover undervalued assets.

“The Australian market is considerably cheaper than the US market on a relative basis,” said Emanuel Datt, CIO of Datt Capital.

“Valuation differentials between the two markets are quite apparent, with Australian equities trading at more attractive multiples compared to their US counterparts.

“This affordability could appeal to investors seeking exposure to high-growth companies at more accessible entry points.

“The outlook for the Australian small cap sector also looks bright.

“Australian small caps present opportunities for growth, particularly in emerging industries like technology, healthcare, and renewable energy. These sectors may offer significant growth potential for investors seeking exposure to innovative companies,” said Datt.

 

In other markets …

Gold price rose by +0.35% to US$2,171.75 an ounce.

Oil prices climbed by +1.7%, with Brent now trading at US$86.74 a barrel.

The benchmark 10-year US Treasury yield jumped by around 5 basis points (bond prices lower) to 4.25%.

Iron ore futures lifted slightly by +0.2 % to US$108.40 a tonne.

The Aussie dollar rose by +0.4% to US65.38c.

 

5 ASX small caps to watch today

Veris (ASX:VRS)
Data services company Veris has successfully led a consortium to become a Digital Twin Victoria Innovation Partner for the next three years. Veris says the services to be provided under the appointment are expected to be significant in value to its operations over the duration of the program.

Avecho Biotech (ASX:AVE)
Recruitment has now begun on Avecho’s pivotal Phase III Clinical Trial testing its oral cannabidiol TPM-enhanced soft-gel capsule for insomnia, a global market estimated at more than $4 billion. The trial is the largest insomnia study of its kind, recruiting 519 patients across sites located in Melbourne, Sydney, Central Coast, Brisbane and Perth.

Tennant Minerals (ASX:TMS)
Bluebird’s first-pass metallurgical test-work delivers 23% copper and 1.5g/t gold in concentrate. The company says this and the high copper recoveries of up to 97% are extremely encouraging, and indicate potential for positive outcomes from future economic studies into mining and extraction to produce a saleable copper and gold concentrate.

Mandrake Resources (ASX:MAN)
Rock chip samples that exceeded laboratory radiation limits have returned consistent, significant concentrations of uranium up to 0.73% U3O8. These results have validated high-grade uranium prospectivity within Mandrake’s extensive land position, which incorporates much of the historic mines that extracted 78 million pounds of U308 between 1949 and 2019.

Rincon Resources (ASX:RCR)
Diamond hole 24WADD001, drilled to 601m, has successfully intercepted multiple zones of disseminated and blebby sulphide mineralisation in its first diamond hole at Pokali. The diamond core is currently in transit to Perth where it will be sampled and delivered to a Perth laboratory as soon as possible for analysis. Results are anticipated to be received from May.

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