• Local markets set to open higher, Friday
  • Late rally sees the S&P 500 close ahead, first time in five days 
  • US China trade war flares as chipmaker banned 

Local shares are set to open higher on Friday. At 8am AEST, the ASX 200 September futures contract is pointing to an early 0.30% gain.

A late rally early this morning has seen the main US index finish higher for the first time in five days. At the Thursday close in New York, the S&P 500 was up by 0.30% while the tech-heavy Nasdaq ended 0.26% lower.

US stocks began to climb on the late release of robust economic data – specifically new American jobless claims – which fell to a two-month low last week According to official data, the total number of August layoffs in the states also beat forecasts to the upside.

The August US Purchasing Managers’ Index (PMI) meanwhile was flat at 52.8. A reading above 50 indicates expansion (and below 50 indicates contraction). Good news, as manufacturing still accounts for 12% of total US economic output.

Most pundits were expecting to see signs of emerging weakness in the US labor market, as well as sluggish factory activity, but despite the hand-wringing over the state of the states last month, apparently none of that happened.

“The US economy is still looking good and that should allow the Fed to remain aggressive with tightening over the coming months,” said OANDA senior market analyst, Edward Moya.

Closer to home, major US chip designer Nvidia said the administration of US President Joe Biden asked the company to halt AI computing chip exports into China. A significant escalation in the dormant trade war and a move that could seriously hamper Nvidia’s business in the world’s second largest economy.

Nvidia shares slumped more than 7% on the news.

Oil prices have likewise slumped, with Brent down another 3.7% to be trading at US$92.10 a barrel. The benchmark crude has now fallen by more than 10% over the last three days.

“China is the key question mark for the crude demand outlook, and it seems that reopening momentum will remain elusive,” said Moya.

The latest zero-COVID lockdown of 21 million people in the vital western transport hub of Chengdu late yesterday, is expected to trigger another massive shock for the Chinese economy.

Health authorities have labelled the situation there as “extremely complex and severe”.

In other key markets, iron ore fell 5% to $US95.60 a tonne, while Bitcoin is trading steady at US$20,115.

Investors are now looking ahead to tonight’s release of US non-farm payrolls and factory orders data for more signals on the movement of inflation and the likely responses from global central banks.

5 ASX small caps to watch today

Piedmont Lithium (ASX:PLL)
Piedmont has chosen Etowah, Tennessee as the location of its 30,000 metric ton per year LHP-2 lithium hydroxide operation. A Definitive Feasibility Study (DFS) is expected by the end of 2022, first production targeted for 2025.

Finder Energy (ASX:FDR)
Finder’s announced positive results from recently completed technical studies on its Gem Prospect. A comprehensive analysis of over 50 wells in the area showed an exploration success rate of greater than 60% for all wells drilled on valid traps. Finder will present the Gem Prospect results at the BEOS conference in London.

Sierra Rutile (ASX:SRX)
And a DFS  has commenced for SRX’s Sembehun Project, with consulting engineers Hatch Ltd on board. Sierra says Sembehun is one of the largest and highest-grade natural rutile deposits in the world, and its development would extend Sierra Rutile’s mine life by at least 13 years. The company is targeting DFS completion in Q3 2023, ahead of a final investment decision.

Avita Medical (ASX:AVH)
Avita says its partner, COSMOTEC, also an M3 Group company, received insurance coverage in Japan for Avita’s RECELL System for the treatment of acute burns. The RECELL System is used to prepare a spray-on using a small amount of a patient’s own skin to treat severe burn. COSMOTEC will now launch and promote RECELL in the Japanese market.

Black Rock Mining (ASX:BKT)
Black Rock’s Special Mining Licence (SML) for the Mahenge Graphite Project in Tanzania has finally been approved. The digger says it received the invoice and is expecting the SML to be issued shortly.