• ASX to bounce back strongly after a tech rally on Wall Street
  • Commodity prices bounced back
  • Goldman says small caps will play catch-up this year


Aussie shares are poised to bounce back strongly on Friday after a tech rally on Wall Street. At 8am AEDT, the ASX 200 index futures contract was pointing up by 0.8%.

In New York overnight, the S&P 500 rose by +0.88%. The blue chips Dow Jones index was up by +0.54%, and the tech-heavy Nasdaq surged by +1.35%.

Shares clawed back some losses from earlier in the week as fresh data shows that US initial claims for unemployment benefits unexpectedly slid to their lowest level since 2022.

The figure could complicate the Fed’s rate cut decision, but at the same time, bolstered the market’s optimism about the US economy.

Atlanta Fed President Raphael Bostic said in a speech that he doesn’t see cutting interest rates until Q3 of 2024, but emphasised he’s open to one if there was “convincing” evidence of a decline in inflation.

“If we wait too long to begin adjusting policy, we run the risk of overtightening the economy,” Bostic said.

To stocks, the tech rally was led by  Apple, which had its best day since May 2023 after rising by 3.3% as Bank of America upgraded the stock from Neutral to a Buy.

TSMC, the world’s biggest chipmaker, was also up +1.2% despite reporting Q4 revenue that was 1.5% lower from a year ago.

The biggest mover was  hydrogen fuel cell developer, Plug Power, which fell -11.5% after announcing a potential US$1 billion stock offering plan.


Small caps are primed for a comeback

After a year of substantial underperformance, small-cap stocks could be primed for a significant comeback, according to Greg Tuorto of Goldman Sachs Asset Management.

“Small caps have not been a fun place to be in 2023,” Tuorto said, adding that the surge in interest rates has provoked questions about whether small-cap balance sheets can withstand higher interest payments.

In addition, innovation has been seen as being driven by larger-cap companies, with investors taking up the idea that the gains from AI and anti-obesity drugs will mostly accrue to the biggest players, he says.

But Tuorto says this belief may be myopic. Smaller companies may actually be in a better position to capitalise on transformative technologies.

“We think that small caps are a great place to access disruptive innovation, because these companies have significantly more leverage to the mega-trends that are out there today.”

When it comes to rates, he points out that the Federal Reserve seems nearly done with its hikes, eliminating a headwind for rate-sensitive companies.

Tuorto’s conclusion? “It’s time for small caps to play catch-up.”


In other markets …

Gold price rebounded by +0.85% to US$2,022.47 an ounce.

Oil prices lifted around +2%, with Brent now trading at US$79.01 a barrel.

The benchmark 10-year US Treasury yield rose another 3 basis points (bond prices lower) to 4.14% as traders unwound rate cut bets.

Iron ore futures bounced back +2.5% to US$129.00 a tonne.

The Aussie dollar surged by +0.3% to US65.71c.

Meanwhile, Bitcoin was down -4% in the last 24 hours to US$40,809.

Now read: The launch of bullion-backed ETFs shot gold into the stratosphere. Could SEC approval do the same for Bitcoin?


5 ASX small caps to watch today

Visioneering Technologies (ASX:VTI)
VTI announced the full one-year results of its ongoing multi-center, double-masked, randomized controlled trial. The trial assessed the safety and effectiveness of VTI’s NVMF lenses for myopia progression control in children. The one-year data shows that 45% of subjects had no myopia progression at all, and nearly two-thirds, or 64%, experienced no meaningful progression (defined as 0.25D or less per year). The PROTECT study is ongoin,g and data will continue to be reviewed, analysed, and shared as available.

Voltaic Strategic Resources (ASX:VSR)
Assay results have been received from recently completed soil sampling survey at the ‘Akira’ prospect, Ti Tree Project, WA. Soil sample results have defined several lithium anomalies over five newly identified trends. Mapping within the anomalies has identified outcrop of pegmatite within Leake Spring Metamorphics (LSM) rock units, which host spodumene mineralisation in the region. Additional infill and extensional soil survey lines are planned for Akira, with analysis and planning for a regional-scale soil sampling program on-going.

Mantle Minerals (ASX:MTL)
Mantle has upgraded its JORC Mineral Resource for the Highway Nickel Deposit. The total (Indicated and Inferred) JORC 2012 Mineral Resource Estimate is now 16.5Mt @ 0.407% Ni for a total of 67,005t of nickel metal. Mantle says it remains focused on the Robert’s Hill and Mt Berghaus gold exploration tenements immediately north of De Grey Mining’s (ASX:DEG)’s 12.5 million ounce Hemi gold deposit.

Cazaly Resources (ASX:CAZ)
CAZ provided an update on its Canadian exploration activities at the Sundown Lithium project located in the heart of James Bay’s lithium province in Québec. Analytical results have been received for rock chip samples. Geochemistry confirmed that the host units are fertile and prospective for LCT pegmatites. Only 1% of the total 260km2 project have been tested to date, while Sachigo First Nations discussions continue for the Carb Lake REE Project.

Adavale Resources (ASX:ADD)
Exploration program for 2024 at the Kabanga Jirani Nickel Project in Tanzania is currently being finalised after encouraging 2023 results. Program being evaluated includes but not limited to: Detailed, deep penetrating ground EM at HEM 4, and potential follow-up drill testing; Completion of DDLUHC006 at Luhuma Central; and Testing coincident geochemical and geophysical anomaly at HEM 2E.


At Stockhead we tell it like it is. While Voltaic Strategic Resources and Adavale Resources are Stockhead advertisers, they did not sponsor this article.