• Local shares to fall, as Wall Street faltered after Fed minutes release
  • NYSE FANG index fell -1.7pc
  • We look at which assets T. Rowe Price is investing in


The ASX is set to fall again on Thursday, in line with broad losses on Wall Street and Europe. At 8am AEST, the ASX 200 index futures was pointing down by around -0.30%.

Overnight, the S&P 500 tumbled by -0.76%, blue chip Dow Jones by -0.52%, and tech heavy Nasdaq by another -1.15%.

Traders dumped equities after the release of the Fed minutes for July showed that officials still saw “upside risks” to inflation, which could lead to more rate hikes.

The yield on the US 10-year note rose to 4.3% after the release, as former US Treasury Secretary Lawrence Summers cautioned that it could go to 4.75% over the next decade.

To stock news, the NYSE FANG index fell -1.7%, with Tesla, Apple and Amazon falling between 1%-3%.

Retail stock Target rose 3% after a surprising surge in Q2 profits.

Intel fell almost 4% after announcing that Chinese regulators failed to approve its US$5.4 billion deal with Israel’s Tower Semiconductor, the latest sign of the frayed ties between China and the US.

Back home, Australia’s unemployment rate for July is expected to hold flat when the data is released today.

Meanwhile, earnings season continues on the ASX, and stocks to report today include Evolution Mining, Origin Energy, Sonic Healthcare and Goodman Group.


T. Rowe Price reveals its asset allocation

In its latest global asset allocation report, fund manager T. Rowe Price said it has kept a modest underweight to equities, as valuations remain elevated.

T. Rowe Price head of Multi-Asset Solutions APAC, Thomas Poullaouec, believes earnings outlook for Australian stocks remains at risk due to sticky costs and tightening of financial conditions.

However Poullaouec notes that current valuations on the ASX look fairly priced assuming a recession is avoided.

“Within equities, we remain overweight areas of the market with more attractive valuation support, such as Japan, small-caps and emerging markets, which could benefit from broader equity participation in the recent rally,” he said.

Within fixed income, Poullaouec has added cash to benefit from the inverted yield curve, adding that bonds remain vulnerable to further central bank tightening.

“While so far it appears the economy may be less sensitive to higher rates than in previous cycles, it is also possible that policy has not been restrictive for long enough to have its desired effects on the economy,” he said.


In other markets …

Gold price fell below the psychological barrier of US$1.9k overnight, trading now at US$1,891.55 an ounce.

Bullion has been under pressure due to the strong USD, which sent the AUD to a nine-month low at US64.24c.

Crude prices fell another 2%, with WTI now trading at US$79.90 a barrel, on concerns over demand from the world’s second-largest oil consumer, China.

Iron ore 62% fe traded flat at US$104.81/tonne.

Bitcoin meanwhile fell -1% in the last 24 hours to US$28,890.

Data shows that 80% of BTC holders are currently in a state of profit, which increases the risk of a sell-off says experts.


5 ASX small caps to watch today

NextEd (ASX:NXD)
The education company expects revenues for this half (H1 FY24) to be in the range of $59m to $63m, 35% to 44% higher than the pcp. The company says the impact of the continuation of the Covid-19 408 Visa on the second half is difficult to quantify. However, NextEd expects that its H2 FY24 revenues will be higher than both H1 FY24, and the H2 FY23 pcp.

Sezzle (ASX:SZL)
Sezzle announce that its shares of common stock will commence trading on the Nasdaq later today US time, August 17. The shares will be listed on the Nasdaq under the ticker symbol “SEZL”. On the ASX, investors will hold CHESS Depositary Interest (CDI) securities under the ticker symbol SZL. The CDIs are convertible at the option of the holders into shares of the Nasdaq stock on a 1-for-1 basis.

Eclipse Metals (ASX:EPM)
Potentially valuable polymetallic mineralisation has been identified in waste rock from the historic Ivigtût cryolite mine. The large volume of mineralised waste material could be processed to create concentrates containing silver, zinc, gallium, copper, lead and gold. Eclipse is now conducting metallurgical test-work to identify processes to produce a saleable concentrate.

Buru Energy (ASX:BRU)
Buru says it welcomes the latest WA domestic gas policy, which requires Canning Basin gas project developers to make available 15% of export volumes for the domestic market. The company says this policy will enhance Buru’s 100% owned Rafael project in the Canning Basin, by confirming the potential for export of onshore gas, with 15% reserved for the domestic market.

Caprice Resources (ASX:CRS)
Rock chip sampling at the new Colosseum prospect at Mukinbudin has delineated a +500m target with a peak value of 5,068ppm (0.5%) TREO (21.3% HREO). 13 of 20 of Colosseum rock chips delivered values of +1,000ppm TREO. Meanwhile, soil sampling at Hadrian’s has delineated a +3km REO anomaly, with peak values of 2,812ppm TREO (16.9% HREO).