• The ASX will open lower ahead of the RBA decision at 2.30pm AEDT
  • Analysts predict another 25bp hike by the RBA
  • Commodities fell across the board overnight on China’s growth downgrade

 

The ASX is set to open lower on Tuesday ahead of the RBA interest rates decision at 2.30pm AEDT. At 8am this morning, the ASX 200 March futures contract was pointing down by 0.20%.

Overnight, Wall Street closed flattish after China cuts its GDP growth outlook to 5% for 2023. Last year, the target was set at 5.5%, but only 3.0% was ultimately recorded.

Also concerning is the fact that economic stimulus hasn’t been discussed so far at the National People’s Congress (NPC) session, which is in full swing right now.

Market also turned jittery after new orders for US manufactured goods fell in January, driven by a plunge in civilian aircraft orders.

Major commodities from copper to iron ore fell on the reports, with iron ore being pushed down by 0.6%, nickel by 0.6% and copper by 0.4%.

“The recent rally might be running out of legs,” said Josh Gilbert, a market analyst at eToro.

“Ultimately, the inflation fight isn’t over, and although we are long-term optimistic, investors should take caution in the size and speed of the rebound this year,” Gilbert added.

To stocks, the best performer last night was Nasdaq-listed BridgeBio Pharma, which surged 52% after announcing positive results in its study of children with achondroplasia, a genetic condition that slows bone growth.

Snap Inc shares also lifted 10% after announcing that it has started kicking dozens of underage accounts off its platform each month.

Crude prices turned positive and were higher by 1% on optimism that the Fed won’t be triggering a hard landing.

“Geopolitical risks also remain elevated as some uncertainty was thrown into mix after reports that Russia and Iran could foster a secret nuclear deal that could give Iran uranium transfers,” said Oanda analyst, Edward Moya.

To the ASX where the RBA is set to deliver another 25bp hike today and take the cash rate to a 10-year high of 3.6%.

It was well noted in RBA’s February meeting that the statement had a hawkish tone, and the wording there suggested at least two more hikes are in the pipeline.

“Further increases in interest rates will be needed over the months ahead,” said the RBA statement in February.

But with the likelihood that inflation has peaked and unemployment slowly rising, the case for the RBA to pause is certainly building.

“If the RBA tips its hat to inflation likely having peaked, it might encourage some excitement over a potential pause sooner than later,” said Matt Simpson, a senior market analyst at City Index.

“On that note, any mention of a pause in today’s statement would likely be as good as a pause itself, which could then weigh on the Australian dollar and send the ASX 200 higher,” he added.

 

5 ASX small caps to watch today

RemSense Tech (ASX:REM)
RemSense has received a contract from AGC Industries on behalf of Chevron Australia to undertake virtualplant scanning of additional LNG facilities through 2023 and 2024 for a total contract value of approximately $2 million. This agreement builds on the successful virtualplant scanning of some Chevron assets last year, with new site scanning work commencing early April 2023.

Minerals 260 (ASX:MI6)
Minerals 260 is set to acquire a large, highly prospective lithium-rare earths project in WA’s Gascoyne Province comprising seven exploration licences from eMetals (ASX:EMT). The licences cover an area of around 789km2. Minerals 260 will issue eMetals 7,000,000 shares on completion at a deemed issue price of $0.30 per share.

Turners Automotive (ASX:TRA)
Following consistent trading results over the summer months, Turners has reiterated the guidance given at the HY23 results announcement. In November, the company said it expected profits to be at or slightly above the FY22 record result. The company is now on track for FY23 profit before tax to be at least $44.0m (vs FY22: $43.1m).

Tennant Minerals (ASX:TMS)
Tennant reported new results from diamond drill hole BBDD0021 at the Bluebird copper-gold discovery, 40km east of Tennant Creek in the Northern Territory. The results include: 24m @ 0.66% Cu and 11.8g/t Au from 161m (downhole), including 5.7m @ 0.74% Cu and 49.3g/t Au and from 161m, also including 4.97m @ 1.06% Cu and 23.9g/t Au and from 165.66m.

Rubix Resources (ASX:RB6)
New sediment-hosted copper targets have been identified at the Paperbark Project. Regional rock chip, soil and stream sediment geochemistry highlights anomalous copper results associated with northeast-trending faults and magnetic anomalies. Copper anomalism is at or above the 95th percentile in statewide datasets. Rubix’s next phase of work will focus on locating a potential source for this copper anomalism.

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