Market Highlights: Solid start to the US earnings season, and 5 ASX small caps to watch on Tuesday
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The ASX is poised to open lower on Tuesday despite a mini rally in New York. At 7.30am AEST, the ASX 200 May futures contract was pointing down by 0.25%.
Overnight, all major indexes on Wall Street – the S&P 500, the Dow Jones, and the Nasdaq – rose by 0.3% each.
US government yields rallied as traders braced for more Fed tightening after New York factory activity, known as The Empire State Manufacturing survey, posted its first positive reading in five months.
The solid start to the US earnings season has also continued, with Charles Schwab and M&T Bancorp reporting strong quarterly earnings beats, but State Street Bank plunged 9% on lower than expected results.
Alphabet (Google) fell 3% after reports said Samsung was considering replacing Google with Microsoft’s Bing as the default search engine to its mobile devices.
Chinese electric vehicle maker XPeng Inc rose 15% after it announced a new technology that could lower production costs.
Moderna slipped 8% after results for its cancer vaccine combined with Merck’s Keytruda showed a “a longish and complex path” for approval.
Netflix’s foray into live programming has hit a glitch, as technical problems in the streaming of dating reality show Love Is Blind led to a one day delay. Experts says the glitch is a high-profile failure for the company, which is trying to expand into live programming.
Crude prices fell 2% with WTI now trading at US$80.91.
Crude prices are falling as the US dollar appears poised for a major rebound, with the Fed now in position to do a lot more tightening.
“The oil market will soon have to deal with recession fears but for now it should be a choppy trade,” said Oanda analyst, Edward Moya.
“The risks of US$100 oil still remain on the table, but current positioning supports a pullback here unless China’s economic impresses.”
China will release a raft of data at 12pm AEST today, and experts believe the data should reconfirm that the nation’s economy is expanding solidly.
Gold price also tumbled by 0.4% overnight to US$1,994.67.
Gold’s path towards record territory is still there, it just might take a little while longer.
“There is just too much earnings, political, geopolitical, and central bank risk on the table. Only a couple of risks need to rattle markets to trigger safe-haven towards gold,” said Moya.
The iron ore price rose +0.7% to $US117.30 a tonne.
The May Federal budget could forecast commodity prices, including iron ore price, to be higher for longer, providing a boost to the nation’s coffers.
But Treasurer Jim Chalmers has suggested re-examining how we forecast commodity prices in the budget, proposing a more “credible but still conservative” alternative to the status quo.
Bitcoin was down 3% in the last 24 hours to US$29,491.
“Cryptos are losing some appeal as banking turmoil risks appear to be disappearing,” said Moya.
Later today at 2.30pm AEST, the RBA will release the minutes from its April policy meeting.
The minutes are expected to reveal why the RBA decided to pause interest rates in March.
They will also give clues as to what RBA members think about the uncertainty from the upcoming mortgage cliff.
The RBA’s attention should now move to the Q1 Inflation reading at the end of April, which will likely tip the scale towards either another hike or end of the tightening cycle.
Plenti Group (ASX:PLT)
For the quarter, the non-bank lender’s loan portfolio has increased to $1.77 billion, 36% above pcp and 6% above prior quarter. Loan originations were $276 million, and net interest margins were maintained. The company’s quarterly revenue was $42.3 million, 48% above pcp, and Plenti said it achieved 2H23 objectives for growth, efficiency and profitability.
EVS’ total ARR (annual recurring revenue) grew 15% in Q3 on pcp to $56.2m. Q3 new sales were $4.2m, up 14% on pcp. The company said it remains on track to achieve its target of transition to Adjusted EBITDA profitability during FY23.
Emyria and PAX Centre will develop a care model for psilocybin-assisted therapy in addition to their existing MDMA-assisted therapy care. The collaboration aims to address substantial overlap between symptoms of depression and PTSD – conditions with growing prevalence – by expanding treatment offerings available for patients with either or both conditions.
Pacific Edge (ASX:PEB)
The cancer diagnostics company Pacific Edge says its test volumes processed in its laboratories in Q4 increased to 8,878 tests, a 14% rise on the 7,768 tests in the prior quarter. The tests processed in Q4 23 is a new record and represents a 42% increase on the 6,242 tests processed in the same quarter of the prior year.
Peak Rare Earths (ASX:PEK)
A binding framework agreement for the Ngualla Rare Earth Project has been executed with the Government of Tanzania in the presence of the Tanzanian President. The agreement facilitates Peak’s staged development approach, and the initial development of Ngualla as a standalone concentrate operation.