• The ASX will open flattish as Wall Street finished modestly lower on Friday
  • US banks were mixed following Q2 results
  • The current tech rally is “not the dotcom bubble”, says analyst

 

Aussie shares are poised to open flattish on Monday following a 4% rise last week. On Friday, the S&P 500 was down modestly by -0.1%, while tech heavy Nasdaq fell -0.18%.

US banks were mixed following quarterly reports from the likes of JP Morgan and Wells Fargo.

Both banks reported higher profits in the quarter, but also increased their provisions for potential losses stemming from commercial property loans.

Citigroup and BlackRock meanwhile were down 4% and 1.5% respectively following their results.

Back home, broker Wilsons has lifted its share price target on market darling Neuren Pharma (ASX:NEU) to $22.32 (vs current price of $13.59). Neuren’s share price has more than tripled over the past 12 months.

Looking ahead to today’s session, the market will turn its focus on the RBA’s minutes for its July meeting where rates were left at 4.1%.

 

‘Not dotcom bubble’

Only about a half-dozen companies are responsible for virtually all of the 18% rally in S&P 500, and 38% rally in Nasdaq this year.

Nvidia,  Apple, Microsoft, Alphabet, Amazon, Meta and Tesla  make up most of this year’s gains, and 28% of the S&P 500 Index’s total value with a combined market cap of around US$10 trillion.

These companies have an average price earnings ratio (P/E ratio) of about 36x, compared to 19x for the S&P 500.

Analysts now warn about the danger of getting caught in a rally led by so few stocks. They argue that even if just one the seven stocks falter, it could mean an end to the current bull run.

However experts also argue that today’s ‘bubble’ is not the same as that of the dotcom bubble of the 1999/2000.

“These companies are not trading at 150 times peak earnings,” portfolio manager of Nancy Tengler told Bloomberg.

“I was managing money through that, and it was ugly, and it deflated very quickly. This is not that.”

 

In other markets …

Gold traded flat on Friday, now changing hands at US$1,954.13 an ounce.

Gold analysts believe that improving economic data in the US including softer inflation could dampen the momentum for gold and cause prices to tumble.

Crude oil prices were also down -0.7%, with WTI now trading at US$74.81 a barrel.

Morgan Stanley says that a potentially mild winter in Europe combined with the continent’s high stockpiles could see natural gas prices halve.

Meanwhile, Bitcoin was flat in the last 24 hours to US$30,331.

BlackRock CEO Larry Fink said he expects crypto to “transcend” traditional currencies, including the US dollar.

Fink has dramatically upgraded his stance on cryptos from an “index of money laundering” in 2017, to saying that they could “revolutionise” finance.

“It has a differentiating value versus other asset classes, but more importantly, because it’s so international it’s going to transcend any one currency,” Fink told CNBC.

 

5 ASX small caps to watch today

Sovereign Metals (ASX:SVM)
Rio Tinto (ASX:RIO) will make an investment of $40.4 million in Sovereign resulting in an initial 15% shareholding. Investment proceeds will be used to advance the Kasiya Rutile-Graphite Project in Malawi. Sovereign says Rio Tinto’s investment represents a significant step towards unlocking a major new supply of low-CO2-footprint natural rutile and flake graphite.

Aurumin (ASX:AUN)
Aurumin has entered into an agreement to acquire a private company, Kurnod, which holds exploration tenement applications E57/1294 and E571302 located adjacent to existing tenure at Aurumin’s 881koz Au Sandstone Project. The project is part of the company’s Sandstone Operations, which also includes the Birrigrin and Johnson Range Projects, and has a total Resource of 946koz Au. The terms include $32,087 payable in cash and the issue of 1 million AUN shares at $0.03.

Marmota (ASX:MEU)
Marmota announced that a major regional reconnaissance program is about to commence. Stage 1 Drilling is expected to commence in about 10 days’ time and is anticipated to continue throughout August. The program is likely to be Marmota’s largest regional reconnaissance program ever, with multiple targets over multiple minerals on a multitude of tenements across the company’s substantial ~10,000km2 tenement package.

Critical Resources (ASX:CRR)
Spodumene mineralisation with surface samples up to 3.2% Li2O have been confirmed during the spring fieldwork program at the Mavis Lake Lithium Project. Standout assay results include: Sample 3347562 with 3.2% Li2O from spodumene, and Sample 347565 with 2.6% Li2O from spodumene.

Podium Minerals (ASX:POD)
Analysis of drill intersections at Parks Reef has confirmed that the PGM reef is located directly below the contact between the mafic and the ultramafic rock units. A modelled interpretation of historic aeromagnetic data has concluded that the mafic/ultramafic contact likely extends to at least 2km vertically below the surface. This is consistent with the observations from the diamond holes drilled that intersected the PGM reef at 500m metres below surface.

 

At Stockhead we tell it like it is. While Sovereign Metals is a Stockhead advertiser, it did not sponsor this article.

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