• The ASX will open higher on Thursday, tracking Wall Street
  • The biggest short trade in the world right now: US Regional Banks
  • Crude prices jumped 2.7% overnight, putting ASX energy stocks on watch

 

Aussie shares are set to open higher this morning after US stocks surged in New York. At 8am AEST, the ASX 200 index was pointing up +0.5%.

Overnight, major indexes Wall Street rose by over 1% as hopes grew the debt ceiling impasse could be resolved by the end of this week.

JP Morgan boss Jamie Dimon said US government will probably not default, while President Biden was confident there will be no default.

Staff level negotiators are now taking over the negotiations as Biden travels to Japan for the G7 summit.

In stock news, retailer Target climbed 2.5% after topping analysts’ forecasts in Q1, but guided the market to a lower Q2 earnings.

Tesla rose 4.5% following its annual AGM after the bell. CEO Musk said he had no plans to step down after being criticised that he was taking on too many roles.

Share price of the world’s biggest chipmaker, TSMC, rose 6% after Japan PM Fumio Kishida announced plans to meet with the company execs.

 

The most crowded short trade right now

Short sellers continue to circle around US regional bank stocks as they slowly recovered from the turmoil.

According to data reported by Bloomberg, short interest as a percentage of shares outstanding in the SPDR S&P Regional Banking ETF (ticker KRE) rose to 92% from 74% a week ago.

The KRE ETF is is the worst performing equity ETF so far this year among about 2,000 of such funds that Bloomberg tracks.

“…. KRE is an extremely crowded short, if not the biggest short in the market right now.

“Squeeze risk is very high, as any positive headlines could cause a scramble to cover….” he added.

But short sellers haven’t stopped hedge funds from snapping up KRE. The ETF was the top buy last quarter among hedge funds as it fell 25%.

 

In other markets ….

Crude prices jumped 2.7% overnight, with WTI trading at US$72.77 a barrel.

Oil was boosted after continued drawdowns in US inventories, and the IEA’s recent bullish outlook for demand.

Spot gold inched lower again, and was down -0.4% to US$1,982.81 an ounce.

TD Securities senior commodity strategist Daniel Ghali is confident the gold market selloff is nearly done, and prices will start to move upwards again to its record high.

“….traders may play a large role in helping gold prices firm, given we expect markets to price in a deeper rate cutting cycle over the next 12 months,” Ghali said.

“We expect gold to print new cycle highs over the coming months.”

Meanwhile, Bitcoin lifted 1.2% in the last 24 hours to US$27,342.

Tether, the company managing stablecoin Tether (USDT), said that it holds around US$1.5 billion BTC in its reserves, and will continue to build up this reserve.

 

 5 ASX small caps to watch today

Australian Agricultural Company (ASX:AAC)
AAC reported operating profit of $67.4m for the full year, vs $49.9m on pcp. Operating profit margin was 21.5%, up 3.4% vs pcp . Statutory Net Profit After Tax was $4.6m vs $136.9m pcp. Net assets have increased to $1.6b, largely due to a $294.2m increase in the value of AAC’s properties.

KMD Brands (ASX:KMD)
KMD said sales growth across all brands continued in Q3 FY23. Rip Curl brand sales were up 7.9% on pcp. Kathmandu brand sales were up 11.3% on pcp. KMD says it is well positioned to benefit from the return of international travel and tourism.

Adveritas (ASX:AV1)
The advertising tech company reported annualised revenue to a record high of $3.55 million, representing a 41% increase since 1 July 2022, and 23% increase since 1 January 2023. The company has recently entered into several new contracts, and has successfully executed on multiple contract up-sell opportunities.

Antilles Gold (ASX:AAU)
Antilles has received an interpreted 3D model, and diagrams of porphyry intrusive areas at various depths based on ground magnetics and Induced Polarisation (IP) surveys. The company said potential size of the porphyry cluster could present a significant tier-1 copper gold project if results from the first stage drilling program replicate, or proximate, the single hole drilled by Antilles Gold in 2022 into the outer zone of the El Pilar deposit.

Fin Resources (ASX:FIN)
High-resolution satellite imagery analysis completed over the Cancet West Lithium Project has identified a significant number of possible Lithium-Caesium- Tantalum (LCT) pegmatite outcrops. FIN has now staked an additional 10 claims for a total of 510 hectares, covering an area of open ground directly west of Cancet West that appears highly prospective for LCT pegmatites.

 

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