• The ASX 200 will open lower on Wednesday
  • Wall Street is softer after US services sector data release
  • Aussie GDP data ahead

Local shares are set to open lower today. At 8am AEST, the ASX 200 September futures contract is pointing down by 0.60%.

Overnight, Wall Street drifted lower after coming back from Labour Day holiday. The S&P 500 fell by 0.41%, the Dow Jones by 0.55% and tech heavy Nasdaq by 0.74%.

A stronger than expected ISM services index for August left investors nervous that the US Fed may keep hiking rates to combat inflation.

The index, which measures the overall economic condition for the services sector, rose to a four-month high of 56.9 in August vs survey of 55.3.

“Stocks are going to struggle because too much of the economy is doing well, and that leaves Wall Street vulnerable to an extended period of rising interest rates,” said OANDA analyst, Edward Moya.

Both US Treasury yields and the US dollar spiked after the release. The benchmark 10-year Treasury yield jumped by 15bp while the 2-year yield rose 11bp.

All major currencies were weaker against the greenback, with the Aussie dollar now trading at US67.37c.

The AUD has lost around US4¢ this year while the US dollar DXY Index has climbed to a 20-year high.

The gold price extended its loss, and is now trading at US$1,701 an ounce. Gold has been tumbling recently as global bond yields rise, with many doubting that we’ve seen the peak in yields.

“Gold is in trouble here if the bond market selloff is the dominant theme of the trading week,” said Moya.

Oil prices fell by another 3% overnight, with benchmark Brent crude trading at US$92.78 a barrel, despite OPEC+ deciding to cut production by about 100,000 barrels per day from October.

Brent has fallen by around 25% since early June after touching multiyear high peaks in March. The next OPEC+ meeting will be on October 2.

“Despite some better-than-expected US services data, global growth isn’t looking good at all and that is trouble for crude prices,” Moya said.

Bitcoin slipped 4% in the last 24 hours to trade at US$18,934. It’s the lowest for BTC since early July, and the question now is, have we bottomed out?

Looking ahead today, lots of juicy data release including Australia’s national accounts and GDP, as well as China trade balance.

5 ASX small caps to watch today

Argenica Therapeutics (ASX:AGN)
The company’s ethics application to commence a Phase 1 healthy participant study of ARG-007 has been approved. Up to 32 subjects will be dosed across 4 dose escalating cohorts to assess the safety, tolerability and pharmacokinetics of ascending doses of ARG-007 in healthy volunteers. The drug is aimed at stroke patients.

Forrestania Resources (ASX:FRS)
Lithium drilling is planned to commence in early December at the company’s flagship Forrestania Project. The project is located approximately 400km east of Perth in the Goldfields region of WA, and is prospective for lithium, gold and nickel discoveries.

Latin Resources (ASX:LRS)
Latin says it’s on track for its maiden JORC Resource in December, with over one-third of planned 100 drill holes completed, for a total of approximately 8,451m. Latest assay results include: 26.88m @ 1.40% Li2O from 94m, and 28.80m @ 1.16% Li2O from 307m.

Security Matters (ASX:SMX)
The company has reported an update of its first half. The total amount of invoices issued in H1 2022 has reached US$1.02 million, an increase of 92% compared to US$532k in H1 2021. SMX says market demand for improved sustainability practices has led to an increasing demand for supply chain and accountability assurance technology, creating a number of unique opportunities for SMX.

Recharge Metals (ASX:REC)
Reverse Circulation (RC) drilling has commenced at the Brandy Hill South Project located within the Archaean Gullewa Greenstone Belt. The RC drilling program consists of approximately 2,000m and has been designed to primarily complete pre-collars for diamond tail drilling.