Market Highlights: Tech stocks sold off, Citi and BofA join bullish gold camp, and 5 ASX small caps to watch today

The ASX is poised to open modestly lower on Thursday
Tech stocks plummeted in the US overnight on rotation away from growth shares
Citi and BoA predict bullish gold target prices this year

Aussie shares are set to edge modestly lower on the last trading session of the week. At 8am AEST, the the April futures contract was pointing down by 0.1%.

Overnight, Wall Street was mixed – the S&P 500 fell -0.25%, the Dow rose 0.24% and tech heavy Nasdaq tumbled -1.07%.

In a rotation away from growth shares, traders were cautious after weaker-than-estimated economic data revived fears that a recession could be in store.

Wall Street normally shrugs off the ADP report, but that did not happen last night. Private employers in the US posted a slower pace of hiring in March — 145k vs 210k estimated.

The US service sector is also cooling. The March ISM service index dropped from 55.1 to 51.2, well below the consensus estimate of 54.4.

Bond yields tumbled (prices climbed) on the reports, with the 2-year and 10-year Treasury yields lifting as much as 8bp.

In stock news, Johnson & Johnson rose 4.5% after quadrupling its offer to settle cancer lawsuits related to its baby powder. The company is now offering US$8.9 billion to the 60,000 claimants.

Biotech InflaRx surged 61% after the US FDA granted emergency use of Inflarx’s monoclonal antibody to treat hospitalised Covid patients.

Bullish gold price predictions

The crude price rally has finally run out of steam as Brent softened by 0.3% overnight to US$84.81 a barrel.

“Over the short-term, it seems we will be stuck with higher oil prices as the Saudis have this market wrapped around its finger,” said Oanda analyst, Edward Moya.

“Gasoline demand in the US is also impressive, and if Americans have big summer vacation plans that could help drive US$100 oil calls.”

Gold’s rally is taking a brief time-out before it makes another attempt at a record high.

The yellow metal finished flat at US$2,019.40 an ounce last night.

Analysts at Citi are forecasting gold prices to have a short-term upside of US$2,300 on the back of several macro drivers, including deflationary pressures and the likelihood of a recession.

Bank of America is also bullish, predicting that gold will rise to $US2,200 in Q4 this year, revising it higher from the $US2,000 call it made earlier.

Bitcoin was down 0.4% in the last 24 hours to US$28,149. BTC is still holding onto the $28k level as crypto traders await any fresh developments.

“The banking crisis is far from over, and that still could prove to be positive for crypto,” said Moya.

Elsewhere …

US prosecutors have arrested and charged Charlie Javice, founder of the now-defunct college financial planning site Frank, with four counts of fraud.

JPMorgan acquired Frank for $175 million in 2021 to gain access to its huge email list. But a few months later, the bank sued Javice, claiming Frank’s client roster was bogus.

Meanwhile, global investors are desperate for signs that China’s Xi and France’s Macron can secure better business ties between China and the EU during the French President’s three-day visit to China.

“Global investors are increasingly bullish on China……” said Nigel Green of deVere Group.

“Stronger ties would reduce uncertainty in financial markets, meaning a more stable and predictable environment for investors.”

Now read: Can the French be trusted not to mess up this week in Beijing? Pretty much everyone thinks not

Ahead, we expect to see the RBA Financial Stability Review and ABS Trade Balance reports released today.

5 ASX small caps to watch today

Immuron (ASX:IMC)
Immuron reported that its global Q3 YTD sales of Travelan and Protectyn increased by 239% in FY23 to $1.46 million, compared to $430k in the pcp. The company has developed these two commercially available oral immunotherapeutic products for the treatment of gut mediated diseases.

Talga Group (ASX:TLG)
Talga announced that the environmental permit for its Nunasvaara South natural graphite mine, part of its vertically integrated Vittangi Anode Project in northern Sweden, has been approved. The decision is subject to a three-week period when appeals can be lodged. The environmental permit was granted with conditions in line with Talga’s Detailed Feasibility Study and permit application.

Elanor Investor Group (ASX:ENN)
Elanor and Challenger (ASX:CGF) have entered into agreements for Elanor to acquire 100% of Challenger’s $3.4 billion Australian real estate funds management business for a maximum consideration of $41.8 million, and establish a broader strategic partnership between Elanor and Challenger. Elanor will issue 27.4 million securities to Challenger as consideration for the acquisition of CRE, representing up to 18.2% of ENN shares on issue.

Grand Gulf Energy (ASX:GGE)
Drilling operations at the high impact pure helium well, Jesse-2, in SE Utah are proceeding on schedule and the company has now received approval for a third Jesse drill permit. The permit allows for a potential follow-on development well in a Jesse-2 success case.

Western Mines (ASX:WMG)
Assay results on an initial aqua regia testwork have been received for selected intervals of observed nickel sulphide mineralisation. All intersections demonstrated better than 97% similarity in assay results, including 50m at 0.32% Ni from 177m in hole MTD012, and 84m at 0.32% Ni from 124m in hole MTD022.