Market Highlights: Wall Street closed, Cathie Wood's ETF faces big losses; and 5 ASX small caps to watch

ASX 200 futures show slight gains; US and UK markets closed
ECB signals potential rate cut; European markets edge up
Cathie Wood’s ARKK ETF sees massive losses; its top holdings plunge

The ASX 200 is poised to extend gains modestly when the market opens on Tuesday. At 8am AEST, the ASX200 futures contract was pointing up by +0.1%.

Overnight, the US market was closed for Memorial Day; the UK market was also closed for May Bank Holiday.

Continental European markets rose slightly higher as traders navigated a relatively quiet trading day. The benchmark STOXX Europe 600 index was up by +0.32%.

Two key figures from the European Central Bank (ECB) expressed their support for a potential interest rate cut in June.

ECB Governing Council member Olli Rehn said in a speech that because inflation is steadily falling towards the ECB’s 2% target, the time is thus “ripe in June to ease the monetary policy stance and start cutting rates.”

Meanwhile, the ECB’s chief economist Philip Lane added, “Barring major surprises, at this point in time there is enough in what we see to remove the top level of restriction.”

To stocks, the oil and gas sector led the gains in Europe, followed by auto stocks. Tech and financial services stocks meanwhile saw the largest declines, making them the biggest losers of the day.

Oil prices bounced back about 1% last night.

Last week, Brent oil prices fell by about 2%, and WTI oil prices dropped nearly 3%. This happened after the Fed Reserve minutes revealed that some officials are open to raising interest rates again if needed to control high inflation.

Looking ahead to the rest of the week, inflation data from Australia, Japan, the Eurozone, and the US will be released.

On Friday, the Fed Reserve’s preferred measure of core inflation is expected to show slight improvement.

Cathie Wood’s ETF is facing big losses

ARK Invest’s flagship innovation ETF fund, run by Cathie Wood, is facing substantial losses, with some individual holdings plummeting by as much as 93%.

The fund’s performance has been notably weaker compared to the overall benchmark index, and just one of its top 10 holdings has seen gains.

Since its peak on February 19, 2021, the ARKK ETF has dropped by 72%.

Meanwhile, its main benchmark, the Nasdaq 100, has surged by 39% during the same period, reaching all-time highs. Year-to-date, the ARKK ETF is down 15%, while the Nasdaq 100 is up 12%.

Here are the biggest losers held in the ARKK ETF, according to data released by Ark and compiled by Business Insider:

Ginkgo Bioworks (down -93%), Teladoc Health (down -93%), Pacific Biosciences (down -90%), Verve Therapeutics (down -81%), and Zoom Video (down -77%).

In other markets …

Gold price rose by +0.8%% to US$2,352.65 an ounce.

Oil prices gained +1%, with Brent crude now trading at US$82.93 a barrel.

The benchmark 10-year US Treasury yield was flat at 4.46% due the US public holiday.

The Aussie dollar lifted by +0.4% to 66.57 cents.

The iron ore price retreated further by -1.3% to US$119.25 a tonne.

Bitcoin meanwhile climbed by +1.4% in the last 24 hours to US$69,572, while Ethereum rose by +1% to US$3,892.

5 ASX small caps to watch today

Matador Mining (ASX:MZZ)
Matador reported assay results from the final 110 drillholes of the 157 hole reverse circulation (RC) drill program at the Malachite Project in Newfoundland, Canada. New gold-in-bedrock anomalism has been identified, including drillhole CRC0142 which graded 127 parts per billion gold from 6 to 7m.

Firebird Metals (ASX:FRB)
Critical safety permit has been received for the construction and operation of the company’s battery grade manganese sulphate plant, which will be located in Jinshi, Hunan Province, China. The safety permit is one of three critical permits required to commence construction, with the other two being environmental and energy. Once permits are in hand and after a Final Investment Decision (FID), expected in the second half of 2024, Firebird will begin building the sulfate plant. Construction is estimated to take 12-15 months, with operations starting in late 2025.

Sun Silver (ASX:SS1)
Sun Silver announced that it has started looking into grants and other funding options available from different US government departments, like the Department of Energy (DOE), through the Inflation Reduction Act (IRA).

Playside Studios (ASX:PLY)
The gamesmaker provided an update to its FY24 revenue and earnings guidance announced in February. Based on year-to-date trading, PLY now expects FY24 revenue to come in between $63m-$65m (previously $60-$65m). FY24 EBITDA is to come in between $16-$18m (previous guidance $11-$13m).

Flynn Gold (ASX:FG1)
Assay results have been received from the first hole in the diamond drilling program at the Trafalgar Prospect, Golden Ridge. This includes three intersections showing more than one ounce of gold per tonne. Multiple high-grade gold veins were intersected in drill hole TFDD016, including: 0.4m @ 67.6g/t Au within 1.3m @ 21.9g/t Au from 248.7m.

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