• The ASX is poised to open lower on Thursday, following Wall Street’s direction
  • Yields soared again overnight, causing stocks to fall
  • Aussie unemployment data due for release today

Local shares are set to fall on Wednesday, taking direction from New York. At 8am AEST, the ASX 200 Dec futures contract was pointing down by 0.80%.

Overnight, Wall St fell across the board as bond yields rose again. The S&P 500 was down by 0.67%, Dow Jones by 0.33%, and Nasdaq by 0.85%.

US treasury yields soared (bond prices lower), with the 10-year rising to the highest level since 2008 ahead of the Fed rate decision on November 2.

The two-year yield jumped to the highest since 2007 as traders price in a peak policy rate closer to 5%.

Fed Bank of St Louis’ Jim Bullard said it’s good the market is pricing in anticipated rate hikes, which should force the Fed to follow through to curb inflation.

“Inflation figures have continued to surprise to the upside, and rates should get closer to 4.5% or 4.75%,” Bullard said in a Bloomberg TV interview.

“That will make 2023 a disinflationary year.”

Bullard’s Minneapolis counterpart Neel Kashkari agreed, saying the Fed could pause rate hikes next year if they see evidence that inflation is slowing.

In equities, stocks tied to the building industry fell following a disappointing report on the US housing industry. Construction on new homes has declined more than expected in September, signalling a slowdown in the economy.

Tesla fell 5% after hours as it missed expectations on revenue for Q3 ($21.45 billion versus $22.09 billion expected).

The company however says it still expects to see a 50% average annual growth rate on vehicle deliveries for the full year.

In Q3, Tesla produced 365,932 vehicles and delivered 343,830. That’s up from the 258,580 it produced and 254,695 it delivered in Q2.

Procter & Gamble also rose 1% after reporting better-than-expected top and bottom lines for Q1. Netflix rose 13% after beating estimates on new subscribers it announced after hours on Tuesday.

In other markets, Brent crude rose 3% to US$92.67 a barrel.

Oil has been riding high as President Biden announced a plan to sell 15 million barrels of crude oil from the nation’s strategic reserves.

Gold fell 1.5% to US$1,628.75 an ounce on the back of US dollar strength.

“Gold bulls keep licking their wounds as the king dollar trade won’t go away,” said OANDA analyst Edward Moya.

“If gold breaks below the $1620 level, it could get even uglier.  The psychological $1600 level might not prove too strong of a support level for gold, which could lead to a plunge to the $1550 level.”

Bitcoin fell 0.55% to US$19,200, while the AUD fell back to a 62 handle, trading at US62.69c.

Closer to home, Medibank Private (ASX:MPL) announced after the bell that it has received a ransom demand from a group that allegedly removed the company’s customer data. This is in stark contrast to the company’s previous claim that no customer data had been stolen.

The MPL shares are still in trading halt as of this morning.

Looking ahead to today’s session on the ASX, Australia’s labour force data including the unemployment rate will be released.

The unemployment rate is currently sitting at 3.5%, and KPMG has forecast that it will rise to 4.5% in 2023.


5 ASX small caps to watch today

Askari Metals (ASX:AS2)
Askari has signed a strategic agreement with Shanghai-listed lithium heavyweight Zhejiang Kanglongda to develop Australian lithium assets. The partnership creates a pathway for the rapid development of the Barrow Creek and Eastern Pilbara Lithium assets positioned for the Chinese markets.

Identitii (ASX:ID8)
The fintech company announced annualised cost savings of $3m, as part of its One Platform rationalisation strategy to reduce legacy technology complexity that is holding back growth. The company expects the annualised savings to be fully realised next quarter (Q3 FY23), and to extend the cash runway into early FY24.

Shree Minerals (ASX:SHH)
Reconnaissance mapping has identified pegmatite drill chips from the spoil of historical drilling to validate the drill logs within Shree’s Dundas Project. The samples collected of the spoil will be assayed for lithium, the pathfinders Cs and Ta and REEs.

Jervois Global (ASX:JRV)
Jervois has secured access to long term, renewable electricity at its Finland operations from two separate 10-year contracts with Statkraft and Gasum which Umicore has entered into for its adjacent business. This renewable electricity represents approximately two-thirds (or 17.5 GWh) of the total annual power consumption at Jervois’ Finland operations (prior to potential expansions) and will commence in 2024 (Statkraft) and 2025 (Gasum) respectively.

Great Boulder Resources (ASX:GBR)
Results received from phase 3 RC drilling at Ironbark, with drilling intersecting the highest gold grade to date at the prospect including: 5m @ 51.65g/t Au from 106m, and 3m @ 27.06g/t Au from 145m.