Market Highlights: Wall Street falls sharply as tech momentum fades; Betashares says build strong core first

Local shares set to open sharply lower on Friday
Wall Street tumbled by over 1pc overnight as tech momentum faded
Betashares says buy ETF for AI exposure

The ASX is set to open much lower this morning as the momentum on US tech stocks dissipated. At 8am AEST, the ASX 200 index futures was pointing down by -1.3%.

Overnight, the S&P 500 tumbled by -1.3%, blue chips Dow Jones by -1.08%, and tech heavy Nasdaq was sold off heavily by -1.87%.

It appears the market is becoming increasingly nervous about the annual gathering of the world’s top central bankers in Jackson Hole, Wyoming, where Jerome Powell is scheduled to deliver a speech on Friday morning, US time.

“The Fed has not come this far to let inflation slip out of its grasp,” said Krishna Guha at Evercore ISI, who added that Powell is likely to deliver a hawkish tone.

To stock news, Nvidia briefly touched all time highs before retreating by 0.1% for the day.

Boeing Co fell 5% after improperly drilled holes in a component that helps maintain cabin pressure were discovered in the 737 Max jets.

Dollar Tree Inc, a chain of discount variety stores, plunged 13% after its earnings forecast fell short of estimates.

Sony has acquired a privately held Californian headphones maker, Audeze, in a bid to advance the sound experience of its PlayStation products.

Meanwhile, the US jobless claims fell for a second straight week, as labor market conditions remained tight. The yield on the US 10-year rose 4bp following the data release.

Back home, earnings season continues on the ASX, and today’s reporting schedule include: Wesfarmers, Accent Group, Ardent Leisure and Jumbo Interactive.

Betashares says build a strong ‘core’ first in your portfolio

Betashares’ senior investment strategist, Cameron Gleeson , says investors should be alive to a couple of key considerations.

First, Gleeson says a properly diversified basket of stocks always offers the ability to participate in the upside growth, as well as provide protection in the event of a short-term pullback.

As such, investors should look to build a portfolio with a robust core – which means buying an ETF that contains diversified exposure to Australian and International equities, bonds and other assets.

When that core has been put in place, investors could only then look to build on top of it.

“Investors can then look to sectors like artificial intelligence, cybersecurity, or cloud computing as a growth exposure in the satellite portion of their portfolio.”

“They could perhaps even include Betashares’ Nasdaq 100 ETF if they want higher A.I. exposure,” said Gleeson.

Second, despite claims of to the contrary, Australia unfortunately largely remains an A.I. free zone.

“True leaders in artificial intelligence are more likely to be found on the Nasdaq in the United States or the Nikkei in Japan,” said Gleeson.

“The reality is, Australian companies in the space are more likely to be disrupted by global leaders than join them.”

Gleeson added that leading megacap tech names in the US are in pole position to take a market leadership role in AI, however, there is still a ways to go before they take full advantage of their position.

In other markets …

Gold rose modestly by 0.15% overnight to US$1,917.05 an ounce.

Oil prices traded flat, with Bren trading now at US$83.20 a barrel.

Iron Ore 62% fe gained +0.3% to US$107.82/tonne.

The Aussie dollar fell slightly to US64.18c.

Bitcoin meanwhile fell -1.25% in the last 24 hours to US$26,112.

BitMEX co-founder Arthur Hayes believes the Fed Reserve will lose its quest to beat inflation, ultimately benefiting “risk assets of finite supply,” such as Bitcoin.

“Bitcoin has a finite supply, and therefore as the denominator of fiat toilet paper grows, so will Bitcoin’s value in fiat currency terms,” Hayes wrote.

5 ASX small caps to watch today

Brainchip Holdings (ASX:BRN)
Brainchip announced that its patent portfolio has been further strengthened after the issue of an Australian patent. The company was granted a patent relating to its Akida 2.0 IP. The patented technology is in the advanced stages of development for integration into the 2nd generation Akida IP, indicating its practical use in cutting-edge hardware.

Botanix Pharmaceuticals (ASX:BOT)
Botanix has appointed Dr Howie McKibbon as new CEO. Dr McKibbon was previously COO for Botanix, and he has more than 25 years experience in the pharmaceutical industry and personally led the successful launch of more than 15 products.

Lion One Metals (ASX:LLO)
LLO announced the discovery of a new mineralised structure carrying bonanza grade gold 1 km to the north of the company’s 100% owned Tuvatu Alkaline Gold Project in Fiji. Surface sampling has returned multiple high-grade results up to 92.55 g/t gold.

Harmoney (ASX:HMY)
For FY23, Harmoney delivered Cash NPAT of $4.7 million, versus $0.2 million in FY22. Revenue was $107 million, up 47% on pcp. During the year, the company’s loan book also grew 28% to $744 million. Looking ahead, Harmoney expects NPAT growth to follow through to 2H24 and beyond.

Alkane Resources (ASX:ALK)
Further high grade gold and copper have ben identified at Boda. Results have been received for three diamond drill holes, and significant intercepts include: BOD094 591.8m grading 0.62g/t AuEq. Drilling in the current program is complete, and final assay results are anticipated in September.