• Tech led a selloff on Wall Street overnight
  • Fed Chair Jerome Powell told Congress higher rates still needed, but at slower pace
  • Bitcoin breached US$30 momentarily


Aussie shares are set to retreat at the open this morning as tech stocks drove Wall Street lower. At 8am AEST, the ASX 200 index futures was pointing down by -0.1%.

Overnight, tech stocks led the dip in New York as Fed Chairman Jerome Powell testified before Congress. The S&P 500 closed -0.52% lower, and the Nasdaq fell by -1.21%.

In his semi annual report, Powell told the House Financial Services Committee hearing that nearly all FOMC participants expect that it will be appropriate to raise interest rates further by the end of the year.

“The process of getting inflation back down to 2 per cent has a long way to go,” said Powell. “It will take time for the full effects of monetary restraint to be realised, especially on inflation.”

Tesla fell more than 5%, while AI stocks such as Microsoft and Nvidia were also down more than 1%.

Crypto-related stocks like Coinbase, Riot Platforms, Marathon Digital and Bit Digital all gained between 1-5% as Bitcoin touched the $30k level before paring back to US$29,906 at the time of writing.

“Who needs regulatory clarity if you see BlackRock making a move?” said Oanda analyst, Edward Moya.


The only thing that can top tech surge is the Fed

The only thing that can stop a powerful surge in tech stocks is the Fed Reserve becoming more aggressive and breaking the economy.

That’s the view of Wells Fargo’s Chris Harvey, who told Bloomberg the market now resembles the tech boom of 1999 and 2000.

“The number one issue is: tech is not going to roll over, the major theme isn’t going to roll over until you crack the economy.

“That’s what happened back in 1999, that’s likely what’s going to happen now,” Harvey said on Bloomberg Surveillance.

“I think we’ll have a pullback in the market, we’ll have a pullback in big tech, but that overall theme is still in place and not until the economy breaks do we really think about that trend breaking.”


In other markets …

Crude oil prices jumped 2% as energy traders anticipate the start of summer should keep demand steady over the next few months. WTI is now trading at US72.62 a barrel.

“Most energy analysts envision US$80 oil at some point this year, so any bullish headline could get us there,” said Moya.

The gold price meanwhile was steady at US$1,933.12 an ounce, and remains under pressure as Fed Chair Powell stuck to the hawkish script.

“It is not just the Fed, but also the Bank of England (BOE) and the risk of many more rate hikes that are making non-interest bearing gold less attractive,” said Moya.

The BOE will meet later tonight and hand its rates decision.

The market is anticipating another rate hike by the BoE, with some predicting by as high as 0.5%, as the UK inflation unexpectedly remained stuck at 8.7% in May, the highest in 30 years.


5 ASX small caps to watch today

Echo IQ has secured a maiden Australian hospital sale of its EchoSolv, an artificial intelligence (AI) driven software technology to Gold Coast Private Hospital, part of Australia’s largest private hospital operator. The agreement includes standard commercial terms for a contract of this nature, and is expected to generate revenues to Echo IQ of approximately $70,000 annually.

The Calmer Co (ASX:CCO)
Formerly Fiji Kava, the company announced the launch of its new e-commerce store in the United States for its FijiKava brand. Previously, FijiKava products were sold online exclusively through the Amazon marketplace in the US. However, due to the consistently strong sales performance over the past three months, with an average daily sales figure of more than $2,400, the company has decided to establish its own online store to further expand its presence in the market.

Argenica Therapeutics (ASX:AGN)
Aregnica’s lead asset ARG-007 is shown to significantly reduce damage to brain cells caused by moderate traumatic brain injury, as assessed in a preclinical rat model, compared to placebo treated controls. The protein levels following ARG-007 treatment were equivalent to non-injured animals. The level of an inflammation marker in the brain was also significantly reduced back to non-injured levels.

Dart Mining (ASX:DTM)
Initial assay data from three holes in the $12 million SQM earn-in program show peak results up to 0.81m @ 1.2% Li2O, and 0.62m @ 1.6% Li2O along with wider intervals of low grade lithium mineralisation. Dart says these initial results confirm lithium mineralisation at depth within these dykes, and further defines the structural and mineralogical characteristics of this dyke system.

Kalgoorlie Gold Mining (ASX:KAL)
High-grade gold mineralisation in near-surface quartz veining including 39.60g/t Au and 6.44g/t Au within shallow excavations at the West Nest prospect was discovered. Zelica is located 115km northwest of KalGold’s new Kirgella Gift and Providence targets at the Pinjin Project.