• The ASX will open higher on Monday, tracking New York’s gains on Friday
  • US housing data shows a possible recession
  • Austria introduces windfall tax for oil companies

 

The ASX is set to open higher on Monday after gains in New York. At 8.30am AEDT, the ASX 200 Dec futures contract was pointing up by 0.35%.

On Friday, Wall Street closed higher by around half a percent despite the housing market data pointing to a possible recession.

In October, US housing starts plummeted by 4.2% in October while building permits declined 2.4% – pointing both to a correction in the housing market and possibly a recession in the wider economy.

The Fed meanwhile is still united in sticking to the hawkish script.

Fed’s Susan Collins noted on Friday that a 75 basis-point rate increase is still on the table as there is no clear evidence that inflation is coming down.

“Despite steady hawkish tones from policymakers, Wall Street remains convinced that they will pivot and probably cut rates at some point around the end of next year,” said OANDA analyst Edward Moya.

US retail stocks were the best performers on Friday as fashion retailer Gap Inc rose 8% following a forecast beat on both Q3 top and bottom line results.

Austria became the latest country to introduce a windfall tax on oil companies after the government said it will introduce a tax that will be as high as 40%.

WTI crude closed the week 10% lower on Friday, capping off its worst weekly stretch since April.

It was a bloodbath for energy bulls, as China’s Covid situation continues to deteriorate ad US economic activity continues to soften.

Credit agency Fitch expects oil prices to fall from US$102 this year to $95 in 2023, and to slip further to US$85 in 2026.

“That said, OPEC+ action is helping to keep a floor under prices and we see scope for a short-term rally over winter, amid tight global energy markets, a seasonal strengthening in demand and further declines in Russian exports,” Fitch said.

To cryptos, where the FTX fallout remains the focus for traders.

Over the last 24 hours, Bitcoin was down 0.75% to US$16,510 while Ethereum fell 3% to US$1,174.

President Joe Biden has called for tighter regulations in the crypto space.

“It is critical to build public awareness of risks, to strengthen regulatory outcomes and to support a level playing field, while harnessing the benefits of innovation,” a White House statement said.

Looking ahead, the People’s Bank of China will be making its interest rates decision today.

 

5 ASX small caps to watch today

Redstone Resources (ASX:RDS)
The company said it discovered outstanding high grade copper mineralisation at the Chatsworth prospect, part of the Tollu Copper project in WA. Drilling results include: 10m at 2.51% Cu from 174m downhole, and 26m at 1.46% Cu from 61m downhole.

Limeade (ASX:LME)
Limeade announced a new enterprise contract with UPMC Health Plan, a Pennsylvania based insurance company. Under the terms, Limeade will receive US$10.5 million over the 3-year contract, representing contracted annual recurring revenue of US$3.5 million. The platform is slated to launch in January 2023 and be available to nearly two million UPMC Health Plan members.

K2Fly (ASX:K2F)
Rio Tinto has selected K2fly’s Reconciliation Module, an extension of its current Mineral Resource Governance Solutions for reconciliation reporting across 24 reporting sites. The 3-year contract term is worth $360k, and an annual recurring revenue of $75k.

Ragnar Metals (ASX:RAG)
Assays have confirmed Ni-Cu-Co mineralisation matching previously reported visual sulphide estimations from the base of the gabbroic intrusion. Results include: 2.86m @ 1.14% Ni, 0.38% Cu & 0.08% Co from 442 – 444.86m.

Invex Therapeutics (ASX:IVX)
Invex announced that the first IIH (idiopathic intracranial hypertension) patient has been randomised into the IIH EVOLVE Phase III clinical trial at VisionSA in Adelaide. Clinical trial sites are now active and open for patient recruitment in Australia and the UK. The IIH EVOLVE is a randomised, placebo-controlled, double-blind trial that will randomise 240 patients with newly diagnosed IIH to determine the efficacy and safety of lead drug Presendin versus placebo.

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