Market Highlights: Stocks rise after US CPI print, lessons from 2023, and 5 ASX small caps to watch today
Aussie shares are poised to open flat on Wednesday after US CPI tracked economists’ forecasts, strengthening hopes of a Fed rate cut.
US stocks were firmly in the green after the CPI release. The S&P 500 rose by +0.38%, the blue chips Dow Jones index was up by +0.43% and the tech-heavy Nasdaq lifted by +0.60%.
US inflation rate slipped to 3.1% in November from 3.2% the previous month, but the closely watched core inflation (which excludes food and energy costs) rose 0.3% in November.
One expert has warned, however, that investors should not be over-confident the Fed will cut rates soon.
“Inflation remains sticky. The Fed will not want to take the risk of pivoting on policy too soon by cutting rates,” said Nigel Green of deVere Group.
“We believe that the data is still not strong enough for the central bank of the world’s largest economy to commit to reversing its most aggressive tightening campaign in decades – yet the markets seem ready to confidently and heavily price-in rate cuts.”
To stocks, Alphabet fell -0.66% after Google lost a monopoly case to Fortnite maker, Epic Games.
Epic Games sued Google in 2020, accusing it of unlawfully making its app store dominant over rivals, and now jurors in San Francisco agreed with Epic and found that the search giant had operated an illegal monopoly.
Computer maker HP Inc fell -0.43% after Berkshire Hathaway cut its holding in the stock by half. Berkshire had held 5.2% of HP on November 30.
Jessica Amir, a market strategist at moomoo, shares her biggest investor lessons from 2023.
The first lesson, she says, is that a company’s share price is based on future cash flows, not necessarily how it performed in the past.
The second lesson is that quality is always key.
“Wonderful companies with high repeatable cashflows and a strong outlook outperformed the market,” Amir said.
“This is why we shouldn’t ignore a company that we think is ‘too expensive’, as Warren Buffett and the late Charlie Munger would say “It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
And the third lesson we need to learn from 2023 is the need to review portfolios and adjust when the tides change.
Commodities, gold, and companies linked in Bitcoin’s accent, such as Nvidia and Block, have started to see substantial moves higher in the back end of 2023.
“Copper is an economic growth proxy. China is the biggest consumer of copper. And we’ve seen the biggest imports into China in two years, on a month-on-month basis with copper imports up 10%, showing China’s economy is starting to finally make waves,” Amir said.
“Gold recently hit a record high. Its rally will likely continue, given the Fed is likely to cut interest rates to avert a recession.
“Plus Bitcoin cracked a 175% gain so far this year, plus it’s mainstream usage is increasing. Public profitable companies such as Tesla, and Microsoft accept Bitcoin as payment.
“You can even use Bitcoin to pay for flights and coffee. Block makes 40% of its revenue from Bitcoin,” Amir said.
Gold price fell by -0.1% to US$1,979.58 an ounce.
Oil prices tumbled over -3%, with Brent now trading at US$73.44 a barrel. Crude prices have now slipped to their lowest level in six months, on concern about oversupply.
US 10-year Treasury yield fell 3 basis points to at 4.20%.
Iron ore futures was up +0.4% to US$135.66 a tonne.
The Aussie dollar fell by -0.15% to US65.60c.
Meanwhile, Bitcoin rose 0.5% in the past 24 hours to US$41,327.
SRJ Technologies (ASX:SRJ)
SRJ announced that it has been awarded a contract by a globally renowned energy technology company, Baker Hughes (NASDAQ: BKR), for the supply of its flange bolt integrity equipment, BoltEx. The initial order was valued at $231k, with subsequent larger order under negotiation. The deal follows recent SRJ product training conducted with Baker Hughes’ global engineering team.
Equinox Resources (ASX:EQN)
Equinox says it has moved to rapidly expand its strategic rare earths exploration footprint in Brazil by applying for a new package of prospective rare earth clay tenements. This involves submitting strategic pegging applications for a ~850km2 Mining Rights package to establish the newly defined “Mata da Corda” Project, located in the rare earth clay prospective province of Patos de Minas. If approved, this will expand the company’s total exploration footprint in Brazil to ~2,550km2 .
WIA Gold (ASX:WIA)
WIA reported assay results from 10 RC drill holes at the Kokoseb Gold Project in Namibia. Highlights include: thick mineralised shoot and strong depth extensions confirmed at the North-West zone: 42.7m at 1.67 g/t Au from 155.9m in KDD015. Western zone was extended significantly at depth with further strong intercepts, including: 7.1m at 3.76 g/t Au from 175m in KDD004.
Firebird Metals (ASX:FRB)
The manganese developer announced another major milestone for its LMFP Battery Strategy, through the completion of an agreement for industrial land with Jinshi local government (in China) for the company’s battery grade manganese sulphate plant. The agreement covers land allocation, tax incentive structures, land rebates for the plant and options for future plant expansions. The land is situated in the Jinshi High Tech Industries Development Zone, Jinshi, Hunan province, China.
Everest Metals (ASX:EMC)
Assay results have reinforced a wide corridor up to 8.5 km of base metal sulphide mineralisation at Revere Gold and Base Metals Project in WA. Near surface gold mineralisation feeders were confirmed at depth, and pathfinders indicated potential for a large orogenic gold system to exist. Follow up drilling is now planned for the June 2024 quarter.