• The ASX 200 is set to open lower on Wednesday
  • Potential sabotage incident at Nord Stream 1 and Nord Stream 2 gas pipelines
  • US SEC fines 8 Wall Street firms US$125m each

Local shares are set to open lower on Wednesday. At 8am AEST, the ASX 200 October futures contract was pointing down by 0.60%.

Overnight, Wall Street finished mixed following a choppy session with the S&P 500 and Dow Jones finishing half a per cent lower, and tech-heavy Nasdaq closing 0.25% higher.

Energy prices rose following a potential sabotage incident at the Nord Stream 1 and Nord Stream 2 gas pipelines.

The two key gas pipelines, which are used to carry Russian gas to Europe, have “mysteriously” developed leaks within hours of each other, prompting speculation about sabotage.

“The Russians have the capability to carry out something like this – and they regularly threaten the internet fibres in the Atlantic to show that they could cut them if necessary. So it could be the Russians,” said Anthony King of the Warwick University.

The incident pushed the benchmark Brent crude higher by 2% to US$85.60 a barrel, while European natgas prices jumped by as much as 22%.

Gold also inched higher on a corrective rebound to US$1,629 an ounce as the US dollar index pulled back from a 20-year high.

“FX is the animal that no one can control and that question of how much stronger the dollar can get could keep commodities heavy over these next couple of months,” said OANDA analyst, Edward Moya.

In the UK, long dated UK government yields have surged to the highest since 2007. The British Pound meanwhile recovered from all time lows to trade at US$1.07.

UK Chancellor Kwasi Kwarteng has been accused of ignoring the country’s 9.9% inflation rate that many economists believe is going to worsen after his announced tax cuts.

In company news, the US Securities and Exchange Commission (SEC) has charged 15 broker-dealers and one affiliated investment adviser for “widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications.”

The securities arms of eight bulge bracket banks have agreed to pay fines of US$125 million each, which include Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS.

Meanwhile, Fed Chair Powell’s comments at a conference hosted by Bank of France did not contain any new bombshells, but he did touch on digital finance and DeFi.

Powell urged policymakers not to rush into imposing rules in the wake of recent scandals such as the collapse of TerraUSD (UST).

“The DeFi winter didn’t have significant effects on the banking system and broader financial stability due to the lack of links between them,” Powell said.

Bitcoin was steady following his comments, and was down only 0.4% in the last 24 hours to trade at US$19,009.

Looking ahead to today’s ASX session, Australian retail sales for August and Q3 job vacancies are scheduled for release.

 5 ASX small caps to watch today

K2Fly (ASX:K2F)
K2F has received contracts for software development services to Fortescue Metals, with a Total Contract Value (TCV) of $1.2m. The services are to be provided and billed on a time and materials basis over an expected period of six months.

Power Minerals (ASX:PNN)
A geophysical survey at Incahuasi Salar Project in Argentina has identified potential additional lithium brine and supports resource drilling. Mineral resource drilling will commence imminently, to be followed by resource drilling at Pocitos and Rincon salares.

Nickel Industries (ASX:NIC)
NIC has finalised the acquisition of an additional 40% interest in the Oracle Nickel Project, increasing its equity interest to 70%. With Oracle Nickel scheduled to commence commissioning in October, the company has completed an early payment of US$212 million to Shanghai Decent to secure its increased interest.

Horizon Minerals (ASX:HRZ)
HRZ says its total gold Mineral Resources increased by 91,000 oz Au to 1.24Moz. A total of 69,000oz Au of new resources have also been calculated for the Coote, Baden Powell and Windanya prospects near Kalgoorlie. The Inferred Mineral Resource estimate at Coote stands at: 425kt grading 1.54g/t Au for 21koz at a 1.0g/t Au lower grade cut-off 3.

IperionX (ASX:IPX)
IPX announced that Halifax County, Virginia, is the preferred location for the development of its first commercial scale 100% recycled, low carbon titanium metal powder operation. The Titanium Demonstration Facility will be the first titanium metal operation using 100% recycled titanium metal scrap as raw material feedstock in the US.