Market Highlights: Wall Street at all-time high, why ASX underperforms US, and 5 small caps to watch

ASX to test record high again, as Nvidia becomes a US$2 trillion company. Picture Getty



  • S&P 500 regains record high, ASX to also test its all time high
  • Nvidia becomes a US$2 trillion company  
  • Gold and oil-related stocks on watch today as commodities climb


The ASX is poised to reset a fresh record high on Monday after the S&P 500 closed at its highest level on Friday in New York. At 8am AEDT, the ASX 200 index futures contract was pointing up by +0.1%.

On Friday, the S&P 500 rose by +0.8 %, the blue chip Dow Jones index was up by +0.23%, and the tech-heavy Nasdaq surged by +1.14%.

Both the S&P 500 and Nasdaq rallied to close out their best February in nearly a decade.

On the corporate front Dell Tech jumped +32% on Q4 revenue beat, driven by AI momentum.

Nvidia rose another 4% to reach a US$2 trillion valuation for the very first time.

Car maker, Fisker, slumped -33% after announcing that it has “substantial doubt about its ability to continue as a going concern”, given its financial condition and the challenging EV market.

Meanwhile, Elon Musk has sued Open AI and its CEO Sam Altman, accusing the AI starlet of breaching the company’s founding mission and “putting profits before humanity.”

Back home, gold and oil-related stocks on the ASX will be on watch today after bullion and crude prices jumped by 2% on Friday.

Looking ahead for the rest of this week, crucial data releases include the Aussie GDP, EU’s rates decision, and a bunch of Fedspeak including Jerome Powell’s testimony to Congress.


Read More: For everything you need to know of markets this week in our handy Traders’ Diary


ASX200 at all-time high, but why has it underperformed US index?

The ASX200 index reset its all time high on Friday, erasing the last record set on December 14th 2023.

This surge can be attributed to several key factors, including the expectations of declining interest rates in 2024, and a general improvement in investor sentiment.

Here’s an interesting piece of information about the S&P/ASX 200 index:

* November 2007: 6851 points
* Today: 7745 points

The ASX has gained 16% in 13 years, which is not all that flashy, especially when the S&P 500 has gained over 90% during the same period.

So why has the ASX 200 significantly underperformed the US index?

According to a note from Roger Montgomery of Firstlinks, it’s all to do with dividends and how the payout ratio is persistently high in Australia compared to the US.

“To avoid the double taxation of dividends in Australia – at both the company level and at the recipient level – franking credits are attached to dividends to the extent that corporate tax has been paid on a company’s profits.

“These franking credits are equivalent to additional cash for dividend recipients whose tax rate is lower than the corporate tax rate.

“But these franking credits are of zero value to a company.

“The result? Australian companies tend to pay out the franked dividends to make their super fund and retiree shareholders happier.

“Thanks to our system of franking credits, our companies will be incentivised to keep paying out most of their earnings as a dividend,” said Montgomery.


Other markets …

Gold price rose by almost +2% to US$2,083,02 an ounce.

Oil prices also climbed by +2%, with Brent now trading at US$83.39 a barrel.

The benchmark 10-year US Treasury yield fell by around 7 basis points (bond prices higher) to 4.18%.

Iron ore futures eased by -1.5% to US$113.20 a tonne.

The Aussie dollar tumbled by -0.40% to US65.28c.


5 ASX small caps to watch today

FireFly Metals (ASX:FFM)
FireFly announced more wide high-grade copper-gold intersections from its drilling program at the Green Bay project in Canada. Results include: 18.0m at 3.3% CuEq within a broader copper zone of 41.1m at 2.3% CuEq, and 18.8m at 3.5% CuEq within a broader copper zone of 47.1m at 2.4% CuEq.

FBR said that its has agreed with Liebherr USA C0 to use Liebherr facilities in Miami, Florida as a service and maintenance base for its Hadrian X robots initially deployed to the United States. FBR recently announced that it was embarking on a Demonstration Program in the US with CRH, with a view to forming a joint venture with a pathway to selling 300 Hadrian X units.

Genex Power (ASX:GNX)
Genex announced that it has received a non-binding, indicative and conditional proposal from Electric Power Development (J-POWER) to acquire Genex shares that J-POWER does not already own for $0.275 in cash. Genex says shareholders need not take action, and it will keep them informed in due course.

Lake Resources (ASX:LKE)
Following the completion of the Kachi Phase One Definitive Feasibility Study (DFS), Lake is rationalising the size of its employee base and general expenses to extend its financial runway. The company previously announced an approximate 40% reduction in expenditures, but it will now reduce global headcount by approximately 50% across its non-core businesses. Lake will also the continue to evaluate the monetisation of non-core assets and lithium tenements, which are unrelated to the Kachi Project.

Lithium Power (ASX:LPI)
LPI announces that its subsidiary, Codelco, has received written confirmation from the Foreign Investment Review Board (FIRB) that the Commonwealth Government has no objection to the acquisition of LPI by Cadelco.


At Stockhead we tell it like it is. While Lake Resources is a Stockhead advertiser, it did not sponsor this article.

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