• ASX expected to drop as Wall Street ends winning streak
  • Fed Reserve’s Michelle Bowman cast doubt on a September rate cut
  • Netflix hit a record high; and gold temporarily reached a new peak

 

Aussie shares are set to fall when the market opens on Wednesday following a dip in global markets as the recent rally loses steam.

At 8am AEST, the SPI ASX200 futures contract was pointing down by 0.6%.

Overnight, the S&P 500 was down by 0.2% to end its 8-day winning streak, the blue chips Dow Jones slipped by 0.15%, while the tech heavy Nasdaq edged lower by 0.33%.

“No market moves in a straight line,” said Matt Maley at Miller Tabak, adding that it would be “healthy” if the equity market took a breather for a day or two.

US Federal Reserve governor Michelle Bowman poured cold water on momentum traders after she stated that she wasn’t quite sold on a September rate cut, citing sticky inflation.

“I have seen some recent further progress on lowering inflation, but inflation is still uncomfortably above the committee’s 2% goal. I still see upside risks to inflation,” Bowman said.

Wall Street, however, anticipates that Jerome Powell will hint at a possible rate cut in September during his remarks on Friday. The focus has shifted from when to cut rates, to whether a 0.5% reduction might be possible.

To stocks, Netflix climbed 1.5% to a record high after announcing a 150% year-over-year increase in upfront advertising commitments, signalling strong growth for its new ad-supported subscription tier.

Microchip Technology Inc dropped 2% and fell an additional 2% in after-hours trading after revealing that a breach by an unauthorised party led to the shutdown of some of its systems.

Eli Lilly & Co. surged 3% after a study revealed that patients using its blockbuster weight-loss shot, Zepbound, were 94% less likely to develop diabetes over three years.

In commodities, gold resumed its rally, touching US$2,525 per ounce to reach a new record high, before retreating slightly.

The price of gold has increased by over 20% this year, driven by geopolitical tensions, expectations of rate cuts, and solid demand from central banks and ETFs.

Back home, earnings season continues with Cleanaway Waste Management, IAG, Fletcher Building and Corporate Travel among the companies set to release their results today.

 

Stocks to keep climbing, says expert

Global equity markets are expected to keep rising, driven by strong sentiment and favourable conditions, according to Nigel Green, CEO of deVere Group.

Green says that the S&P 500’s impressive rally is supported by increased corporate buybacks, which reduce stock supply and boost prices.

Momentum traders are also fuelling the rally, while anticipation of Fed Reserve rate cuts adds to market enthusiasm.

The Fed’s potential rate cuts are seen as more likely now, given easing inflation and resilient economic growth. This would make equities more attractive compared to bonds.

Current market dynamics, including investors’ fear of missing out, further support rising stock prices.

While there are global economic challenges, such as potential slowdowns in Europe and China, the overall market remains optimistic. Corporate earnings are strong, and despite possible risks, the current trend is upward.

“For now, the bulls are firmly in control, and the path of least resistance appears to be higher,” Green concludes.

 

In other markets …

Gold price rose by 0.5% to US$2,515.50 an ounce, after touching a record high of US$2,525 earlier in the day.

Oil prices fell 1%, with Brent crude now trading at US$77.07 a barrel.

The benchmark 10-year US Treasury yield fell 7 basis points (bond prices higher) to 3.81%.

The Aussie dollar climbed by another 0.2% to US67.47 cents.

Bitcoin meanwhile lifted by 0.5% in the last 24 hours to US$59,374, and Ethereum lifted by 1% to US$2,586.

 

5 ASX small caps to watch today

Bioxyne (ASX:BXN)
Bioxyne has successfully manufactured Australia’s first GMP-certified pharmaceutical cannabis gummies. In July, the company received $2 million in orders for these edibles and signed a two-year supply agreement worth at least $28 million with a major cannabis company. To meet increasing demand, BLS is boosting its production capacity from 2 million to 6 million gummies per month. Bioxyne says it aims to be a leading supplier of alternative pharmaceuticals, including cannabis products, psilocybin, and MDMA.

Westgold Resources (ASX:WGX)
Westgold has announced impressive drilling results from the Fletcher Zone at the Beta Hunt mine. Recent assays reveal several significant gold intersections, including 4.00 meters at 22.45 grams per tonne and 5.00 meters at 10.95 grams per tonne. To speed up its Stage 3 Resource Definition drilling program, Westgold will add two more drill rigs, bringing the total to three. The company aims to complete a maiden Mineral Resource Estimate by late Q2 or early Q3 of FY25.

Everest Metals (ASX:EMC)
EMC has announced a significant rubidium resource at its Mt Edon project in Western Australia. The initial Mineral Resource Estimate reveals 3.6 million tonnes of ore at 0.22% Rb2O and 0.07% Li2O. This includes a high-grade zone of 1.3 million tonnes at 0.33% Rb2O. The Mt Edon resource contains over 7,900 tonnes of rubidium oxide, a critical material used in various high-tech and defence applications. The mineralisation remains open for expansion, with future drilling planned for late 2024 or early 2025.

DevEx Resources (ASX:DEV)
DEV has announced strong results from leach testing at its Kennedy rare earths deposit in Queensland. Tests on drill samples showed up to 73% recovery of key rare earth elements using an ammonium sulfate solution in weak acidic conditions. The results improve on previous findings and suggest good commercial potential for the project. The deposit’s unconsolidated gravel clays make it easy to sample further, and these promising results will help guide more detailed testing and development. This work was supported by a Queensland Government grant.

Step One Clothing (ASX:STP)
STP reported strong results for the year ending June 30. Revenue rose 30% to $84.5 million, EBITDA increased by 50.8% to $18.1 million, and net profit grew 44% to $12.4 million. The company gained over 1.67 million new customers and ended with $39 million in cash and no debt. STP declared a fully franked dividend of 2.8 cents per share, totalling 6.8 cents for the year.

 

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

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