Market Highlights: US stocks jump on Jerome Powell comments; and 5 ASX small caps to watch on Thursday

The ASX will open higher on Thursday after a rally on Wall Street overnight
US Fed Chair Jerome Powell signalled slower rate hikes
EU inflation rate has softened

The ASX is set to open higher on Thursday on the back of a strong rally in New York. At 8am AEDT, the ASX 200 Dec futures contract was pointing up by 0.45%.

Wall St surged higher as Fed boss Jerome Powell signalled the pace of rate hikes in the US will slow down starting this month.

Bond yields dropped and equities surged on his comments – the S&P 500 was up by 2.10%, the Dow by 1.32% and tech heavy Nasdaq by 3.10%.

Powell explained that inflation in the US remains too high, but rate hikes must be slowed down because prior rate increases have yet to take their full effect.

“Monetary policy affects the economy and inflation with uncertain lags, and the full effects of our rapid tightening so far are yet to be felt,” he said.

“Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down.”

The Fed will make its next rates decision on December 13-14.

There were more good news as the GDP print for Q3 showed that the US economy is growing. US GDP (gross domestic product) grew by 2.9% annualised in the third quarter, an increase from 2.6% in the last quarter and beat the consensus estimate of 2.7%.

“But the economy is still expected to have weakening economic data points going forward as the impact of Fed rate hikes starts to be felt,” says OANDA analyst Edward Moya.

“A soft landing or a short and shallow recession still seems to be the favourite scenarios for how 2023 will be.”

Meanwhile across the Atlantic, EU inflation has slowed to 10%, below market expectations of 10.4%. The ECB is set to make its rates decision on December 15th.

Separately, ECB director General Ulrich Bindseil said Bitcoin is on the “road to irrelevance” and called for its ban.

“Bitcoin’s conceptual design and technological shortcomings make it questionable as a means of payment,” Bindseil said.

BTC was up 3.75% in the last 24 hours to trade at US$17,058. lol.

In other markets, oil prices rose over 3% as the EU continues to work towards agreeing a price cap on Russian crude, while OPEC+ is considering another production cut this weekend.

Gold is also benefiting from improved risk appetite as the US dollar softens and yields edge lower following Powell’s comments. The spot gold price is currently trading at US$1,769 an ounce.

Looking ahead, Corelogic will release its national home value report for November, while business investment data for the September quarter is also scheduled.

5 ASX small caps to watch today

XTEK (ASX:XTE)
XTEK has received a purchase order from the Commonwealth of Australia’s Department of Defence, totalling $26.9m, for new Small Unmanned Aerial Systems (SUAS). Delivery is expected to be completed in late H2 FY23 with corresponding revenues recognised in the same period.

Echo IQ (ASX:EIQ)
Echo IQ has achieved positive results from its clinical study conducted at Beth Israel Deaconess Medical Center (BIDMC) in the US. Echo IQ’s AI-powered EchoSolv was applied to the BIDMC patient dataset, and out of 31,141 patients reviewed, ~5% were identified with severe aortic stenosis. The conclusion is that the use of EchoSolv could identify those individuals who need timely evaluation.

Alloggio Group (ASX:ALO)
Alloggio has acquired ‘A Perfect Stay’ and ‘Boutique Stays’ (together called ‘A Perfect Stay’) for $11 million, including a $2 million earn-out. The acquisition adds additional scale and provides Alloggio entry into the key tourism destination areas of the Gold Coast, NSW North Coast, and Melbourne CBD.

Triton Minerals (ASX:TON)
Triton and cornerstone shareholder Shandong Yulong have formally re-committed to the large-scale development of the Ancuabe Project as per the 2017 Definitive Feasibly Study. The two companies intend to establish the project as a globally significant graphite development project, targeting production of 60ktpa of high purity large flake graphite concentrate over a long mine life (27 years), with short payback period (3.7 years).

Kuniko (ASX:KNI)
Kuniko has established two new copper projects with exploration licences granted in the historically important copper producing area of Trøndelag county in Norway. The Vaga Copper Project consists of 33 exploration licenses across a land holding of 321.6 square kilometres. The Gullklumpan Copper Project meanwhile consists of nine exploration licenses across a land holding of 73 square kilometres.