Market Highlights: US inflation and 5 ASX small caps to watch on Thursday

US inflation is at the highest level in 41 years
Wall Street was down, but didn’t react strongly to the data
The ASX is set to open flattish

US CPI delivered another shock as the latest release showed that headline inflation rose by 9.1% year on year in June, beating market expectations of 8.8%.

It was the highest level in 41 years.

From May to June, prices rose by 1.3%, versus 1% the previous month. Excluding food and energy, core CPI rose 5.9% year on year, versus 5.7% consensus.

President Joe Biden said the headline of 9.1% figure was “out of date”, saying that fuel prices already fell in July.

Energy alone comprises nearly half of today's inflation numbers. So, here's what's important:

– The price of gas has decreased for 30 days straight, the price at the pump has dropped by 40 cents since mid-June.
– Gas should continue to come down in the days and weeks ahead.

— President Biden (@POTUS) July 13, 2022

Nigel Green of deVere Consulting agrees that it’s backward-looking and includes the high gas prices from June, but notes that investors will still be nervous when they see this kind of reading.

“Many will be jittery about a potential rate move of 100bps at the end of this month (26 July) by the US central bank,” Green said.

But he advises that investors should maintain a “legitimate sense of perspective”, adding this could be a good time to top-up portfolios.

“The panic-selling will create some important long-term opportunities with high upside potential and low risk possibilities for those who buy judiciously. It’s an ideal time to seriously build your wealth by remaining fully and wisely invested and growing your investment portfolios,” he added.

Other experts believe the latest data will force the Fed Reserve to push ahead with aggressive monetary tightening, even at the cost of a recession.

Wall Street didn’t react strongly to the data, with all three major indices falling only slightly by around 0.5%.

In other markets, oil prices also bounced back by 0.2% after the 8% plunge yesterday, while iron ore traded higher overnight by 2% to US$109.40 a tonne.

Bitcoin was also up 1% to $US19,904 at 8.30am AEST.

Ahead today, China will release a raft of data including property sales, industrial production, and the crucial Q2 GDP.

5 ASX small caps to watch today

Australian Ethical Investment (ASX:AEF)
During the quarter, AEF reported positive net inflows of $102 million. For the full year of FY22, net inflows were $943 million, a 20% increase on FY21. This takes AEF’s FUM (funds under management) to $6.2 billion as of June 30.

Data#3 (ASX:DTL)
The info tech company says it expects to deliver a consolidated NPAT for the full year of FY22 of approximately $44 million, a 19% rise on the prior year. The pre-tax profit associated with backorders is estimated to be at least $6 million, which is expected to be realised in the first half of FY23.

Essential Metals (ASX:ESS)
Current activities at the Pioneer Dome Lithium Project in WA are expected to pave the way for an updated Mineral Resource and scoping study in the December 2022 quarter. Resource extension drilling, metallurgical test work, and mining lease application are currently underway. Diamond drill core obtained from the March quarter drill programme included: 19.2m @ 1.44% Li2O from 15m, and 31.95m @ 1.24% Li2O from 45.4m.

Complii Fintech Solutions (ASX:CF1)
The SaaS tech company had another solid quarter, with group revenue receipts from customers of $2.557m in Q4 FY22, a 336% increase from the pcp. For the full year of FY22, annual group revenue receipts from customers were $9.057m, a 403% increase from the pcp.

Compudemics (ASX:CMP)
The medical device company says sales orders taken for FY22 were a record $45.6m, a 29% increase compared to the $35.3m of new sales orders booked for FY21. Unaudited revenues were approximately $37 million for FY22, a 4% increase on FY21.