Market Highlights: Stocks to fall as Fed now says it isn't 'talking about rate cuts'; 5 ASX small caps to watch

Aussie shares are poised to open much lower on Monday even as US stocks gained further momentum. At 8am AEDT, the ASX 200 index futures was pointing down by -1%.

On Friday, the S&P 500 closed flat, the blue chips Dow Jones index was up by +0.16% and the tech-heavy Nasdaq lifted by +0.35%.

Traders digested comments from Fed Reserve president John Williams, who told CNBC on Friday that talk of a March rate cut was premature.

“We aren’t really talking about rate cuts,” Williams said.

“Have we gotten monetary policy to a sufficiently restrictive stance in order to ensure that inflation comes back down to 2 per cent? That’s the question in front of us,” he said.

Among the stock movers were Costco, which gained +4.5% and hit an intraday record high after reporting Q1 results that beat analysts’ expectations. Costco said consumers are flocking to Costco’s lower priced groceries and other products.

Cybersecurity company CrowdStrike rose 3% after new SEC rules that require US companies to disclose a breach within four days of determining that a hack will have a material impact on the business are set to take effect on December 18.

Chinese e-commerce JD.com lifted by +4.5% as investors digested a fresh stimulus boost in China, as well as the prospect of further measures.

Looking ahead this week, the only releases worth nothing are the RBA’s Board meeting minutes for December, and US PCE core inflation for November.

What are the biggest risks for markets in 2024?

During the Amundi Investment Seminar, the research team at Amundi asked investment professionals questions to help define a forecast for what 2024 will be like for the economy, geopolitics and investments.

The number one risk that investment professionals all agree on is that rate hikes will start to bite in 2024.

“As a result, we still expect the economy to experience a mild recession in the coming quarters,” said the note from Amundi.

“With the depletion of excess savings and less support from wage growth, consumption will continue to moderate.”

The second biggest risk in 2024, according to Amundi, is a spike in oil prices.

“There are higher downside risks to many geopolitical scenarios next year. But despite bigger downsides, our base case remains that most of these tensions will not ‘boil over’ next year.”

The third biggest risk in 2024 is a potential crash in private markets.

But there are also some positives, says the fund manager.

“Barring further and persistent shocks in oil prices, headline inflation will appear somewhat sticky over the next few months and then converge towards target by the end of next year,” said Amundi.

In other markets …

Gold price fell by -0.8% to US$2,019.60 an ounce.

Oil prices snapped a seven-week losing streak, closing the week -4% lower. Brent slipped -0.2% on Friday to US$74.73 a barrel.

US 10-year Treasury yield fell 1 basis point to 3.91%.

Iron ore futures was down -0.1% to US$135.08 a tonne.

The Aussie dollar was rangebound, trading now at US67c.

Meanwhile, Bitcoin fell -1% in the last 24 hours to US$41,919.

5 ASX small caps to watch today

Vista Group (ASX:VGL)
The film industry-focused tech company announced the signing of a new agreement with Cinépolis, the largest cinema exhibitor in the world, to transition Cinépolis’ Cine Yelmo circuit in Spain to Vista Digital during H1 2024. Cine Yelmo is a leading company in the exhibition sector in Spain, with more than 40 years in operation. The agreement includes all of Vista Digital’s digital enablement and data empowerment capabilities, including Vista Group’s Horizon and Vista Oneview offerings.

Alligator Energy (ASX:AGE)
Alligator announced a strategic investment into EnviroCopper (ECL), which is 30% owned by Thor Energy (ASX: THR), to further develop InSitu Recovery (ISR) copper projects. Alligator will make an initial investment of $0.9m for 7.8% of ECL. ECL is currently advancing ISR trials for environmentally sustainable copper extraction at its flagship Kapunda copper project, and has similar plans at its Alford West copper project to help meet copper demand.

Step One Clothing (ASX:STP)
The online, direct-to-consumer inner-wear company expects its H1 FY24 financial results to fall within the following range: H1 revenue is expected to be between $44m and $45m, representing growth of 22% to 25% respectively above the pcp. H1 EBITDA is expected to be between $10m and $11m (versus 1H23: $7.5m).

Peak Rare Earths (ASX:PEK)
Drilling for the 2023 exploration program has been completed. Some 57 holes for a total of 4,190m were drilled across the Northern Zone and Breccia Zone targets (3,979m of RC drilling and 211m of DD drilling). Assays received include: NRC352: 10m at 0.55% Nb2O5 from surface, and NRC356: 14m at 0.55% Nb2O5 from 14m.

Great Western Exploration (ASX:GTE)
Further interpretation of geophysical data has been completed on the giant Oval and Oval South targets. The interpretation has further enhanced prospectivity of these two potentially transformational Winu style intrusive related copper-gold targets. Oval and Oval South were originally defined by Rio Tinto in the late-1990s, and further defined by Sandfire Resources.