• The ASX will open slightly higher after modest falls in New York
  • Traders are still on edge about a potential US default
  • Newcrest has accepted the takeover deal by Newmont

 

The ASX is set to open higher on Monday despite a sluggish session in New York. At 8am AEST, the May ASX 200 futures contract was pointing up by 0.1%.

On Friday, Wall Street closed lower around -0.25% as banking jitters persist, and the possibility of a US default remains on the table.

Treasury Secretary Yellen reiterated that a default would be “an economic and financial catastrophe”, and would trigger a global economic downturn.

A meeting between President Biden and top lawmakers scheduled for Friday to discuss the issue has been postponed, and the leaders agreed to meet early this week.

Separately, US consumer sentiment dropped to its lowest level since November, while long-term inflation expectations jumped to a 12-year high at 3.2%.

“I expect that our policy rate will need to remain sufficiently restrictive for some time to bring inflation down,” said Fed’s board member, Michelle Bowman, who’s a known centrist.

To stock news, News Corp gained 6% after the media conglomerate beat profit estimates for Q3.

Netflix was down 1.4% after plans to cut its spending by $300 million this year were announced.

Best performer on the S&P 500 was solar panel maker First Solar, which jumped 26% after acquiring Sweden’s thin-film solar cell tech firm, Evolar AB.

This week is important week for earnings, with Walmart and Home Depot among major US retailers to report, which will offer clues on consumer resilience.

 

Newcrest accepts takeover by Newmont

News is just in that Newcrest Mining (ASX:NCM) has agreed to the takeover deal by its pursuer Newmont Corp, worth about $28.8 billion.

Newcrest shareholders will get 0.4 shares in Newmont for every Newcrest share they own, giving them 31% ownership of the combined company.

The deal is expected to to create the world’s biggest gold producer.

“This transaction will combine two of the world’s leading gold producers, bringing forward significant value to Newcrest shareholders through the recognition of our outstanding growth pipeline,” said Newcrest’s chairman, Peter Tomsett.

The combined group will have assets in places like North and South America, Africa, Australia and Papua New Guinea.

The combined company will also expand its mining exposure to copper, a key metal in the clean energy transition.

 

In other markets…

Oil prices dropped slightly on Friday as the US dollar rally extends. The WTI is currently trading at US$70.15 a barrel.

Several oil headlines have provided mixed signals for energy traders, with Iraq signalling there will be no additional reduction from OPEC+.

Gold is trading flat at US$2,010.65 an ounce.

“The institutional world is buying gold again, posting the biggest one-day increase with ETF purchases in almost two months,” said Oanda analyst, Edward Moya.

“Gold just needs to survive this dollar rally, and it should benefit from steady safe-haven flows as Wall Street worries over geopolitical stress, a debt ceiling impasse, and potentially further regional banking issues,” he added.

To cryptos, where Bitcoin rose 0.25% in the last 24 hours to US$26,926.

Analysts believe Bitcoin will be subject to further downside pressure until we get some regulatory clarity in the US.

Meanwhile, some say that Bitcoin offers a safe haven in the face of the banking crisis.

Bitcoin provides a decentralised and secure alternative to traditional banking, and is largely immune to inflation and government interference, potentially making it an attractive option during this crisis.

 

5 ASX small caps to watch today

Tyro Payments (ASX:TYR)
Tyro has upgraded its FY23 gross profit and EBITDA guidance ranges after strong results were achieved year-to-date to 30 April. Gross profit has been upgraded to $192m to $194m (previously $187m to $191m). EBITDA was upgraded to $41m to $43m (previously $37m to $41m). As a result, Tyro is now targeting operating leverage of 78% and an EBITDA margin of 22% (previously 21%).

Argenica Therapeutics (ASX:AGN)
Argenica reported its final Phase 1 clinical trial report on lead drug ARG-007 used in the treatment of stroke. All doses of ARG-007 administered were safe and well tolerated, with the rapid uptake of ARG-007 indicating the fast-acting nature of the drug. ARG-007 was also shown to have an extended half-life (time in which the drug remains in the body), suggesting prolonged efficacy at the effect site. This report was the final component of Argenica’s ethics submission for initiating a Phase 2 trial.

Lithium Energy (ASX:LEL)
Further assays have confirmed significant lithium brine concentrations across massive intersections at Solaroz in Argentina. Assays have confirmied 473.5m of lithium-rich brines (up to 508mg/l Lithium) in SOZDD004 to 647.5m depth, with assays for an additional 140m (to 787.5m depth) in that hole still pending.

Red Mountain Mining (ASX:RMX)
Exploration drilling permit for RMX’s Mustang Lithium Project has now been granted by the US Nevada Bureau of Land Management. Site preparation along with constructing drill access tracks at Mustang are expected to commence this week. Phase 1 drilling is on schedule to commence toward the end of May.

Victory Metals (ASX:VTM)
All RC drilling assay results are now received, and combined with AC drilling assay results have confirmed 987ppm Total Rare Earth Oxide (TREO) grade from 219 holes. RC drilling has identified up to 1.08% (10,829ppm) TREO, with 59% Valuable Heavy Rare Earth Oxides (HREO/TREO). Assays from the AC and RC drilling programmes have also confirmed high ratios of Heavy Rare Earth Oxides totalling 34% HREO/TREO.

 

At Stockhead we tell it like it is. While Lithium Energy and Victory Metals are Stockhead advertisers, they did not sponsor this article.

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