• Wall Street rebounds from yesterday’s losses
  • Microchip stocks traded higher, and US GDP came in lower than expected
  • The outlook for small caps in 2024

 

Aussie shares are poised to open flat on Friday ahead of a four-day long Christmas holiday weekend, despite a rebound on Wall Street.

Overnight, the S&P 500 bounced back by +1.03%, the blue chips Dow Jones index was up by +0.87%, and the tech-heavy Nasdaq lifted by +1.26%.

Traders digested the weaker than expected Q3 US GDP data, which printed at 4.9% vs estimate of 5.2%. The weak data prompted a bond rally that pushed yields lower.

To stocks, microchip stocks traded higher, with Micron Technology leading the pack, up by 9% after beating expectations on Q1 sales and providing a bullish guidance.

Apple shares were flat despite halting sales on some of its smartwatches in the US amid ongoing patent dispute with medical tech company, Masimo. Both the Apple Watch Series 9 and Ultra 2 became unavailable to order online beginning at 3pm ET, US.

Blackberry shares dropped -13% as the company’s Q4 revenue guidance came in at a range of $150 million to $159 million, below analysts’ forecast of $190 million.

The Aussie dollar meanwhile climbed to a five-month high as US yields fell further, breaching the US68c handle and trading now at US68.02c.

 

Small caps outlook 2024

Some experts believe small-cap stocks will soar higher in 2024.

There’s a few good reasons why this could happen, including the decent Q3 US GDP growth of 4.9% announced overnight. Consumer spending in the US has also grown 4%, the most since Q4 of 2021.

The dovish Fed Reserve is another reason small caps could rise next year. The latest datapoints indicate that inflation is on the decline, and there is even a chance of a 75 bps rate cut in 2024.

Eric Green, CIO of Penn Capital Management, believes that the latest rally in small caps has been long overdue.

“Valuations for small-cap companies have become compressed relative to their larger counterparts, making them an attractive option for investors,” he said.

Fundstrat’s head of research, Tom Lee, has also projected a small-cap rally in 2024.

Lee said in January 2023, most economists believed the US economy would slide into a recession.

“2023 was a year where the [stock market] technicians got it right … And economists got it wrong” Lee said.

“In 2024, I think that this is actually still a residual game plan … the technicians will get the year right and the economists are gonna get the year wrong.”

 

In other markets …

Gold price rose by +0.8% to US$2,045.12 an ounce.

Oil prices was lower by -0.3%, with Brent now trading at US$79.56 a barrel.

Iron ore futures lifted +0.35% to US$135.31 a tonne.

The Aussie dollar surged 1% to US68.02c.

Meanwhile, Bitcoin was up +0.6% in the last 24 hours to US$44,005.

 

5 ASX small caps to watch today

Mandrake Resources (ASX:MAN)
Mandrake has executed a non–exclusive Strategic Alliance Agreement with US-based Direct Lithium Extraction (DLE) company, Electroflow Technologies. Electroflow is funded and backed by Bill Gates’ Breakthrough Energy Fellows programme. Electroflow’s proprietary electro-chemical process uses lithium-selective electrodes to convert saltwater brines into lithium chemicals for batteries. Electroflow has now received brine samples from Mandrake’s 100%- owned Utah Lithium Project with processing now underway.

Spenda (ASX:SPX)
The payments fintech company signed a 10-year Master Services and License Agreemen with Capricorn for the provision of software and ecommerce payments infrastructure. Spenda will work closely with Capricorn to customise its payments infrastructure for use by Capricorn’s members and suppliers over the next six months. Spenda expects to generate a minimum $2m in revenue from software and services in calendar year 2024. The parties have also agreed to a 5+5 year option, which if exercised, would extend the agreement to a 20-year term.

FireFly Metals (ASX:FFM)
Firefly has agreed to acquire 169 sqkm of additonal ground adjacent to its Green Bay copper-gold project acquired from Gold Hunter Resources. The total purchase price is C$15.5 million, comprising C$500,000 in cash and C$15 million in fully paid ordinary FireFly shares. Firefly says the acquisition solidifies the company as a dominant landholder in the highly prospective Baie Verte VMS mineral district of Newfoundland, Canada.

Novo Resources (ASX:NVO)
Over 10,500 m combined aircore and reverse circulation drilling have been completed by De Grey Mining at the Becher project, which forms part of the Egina earn-in/Joint Venture. At Becher, 271 infill AC holes were drilled for 7,536 m in Q4 2023. RC drill program is ongoing, with the first 29 drill holes for 4,154 m completed. Final assays are anticipated in Q1 2024.

ikeGPS Group (ASX:IKE)
IKE has signed a ~NZ$3.7m subscription contract with a Fortune 150 company and one of the ten largest Investor-Owned-Utilities (IoU’s) in the US., upgrading them from IKE’s legacy product to its new PoleForeman structural analysis platform. Over the coming five years, this long-term customer commitment means over 1,000 engineers at this utility will use IKE Poleforeman’s advanced capabilities.

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