• ASX to open sharply lower as Wall Street spooked by strong US jobs data
  • Cannabis stocks jumped after the US DEA downscheduled pot
  • Amazon popped on top and bottom lines beat


Aussie shares are poised to open sharply lower on Wednesday as Wall Street dropped heavily on hot US jobs data. At 8am AEST, the ASX200 futures contract was pointing down by -1.2%.

Overnight, the S&P 500 fell by -1.57%, the blue chips Dow Jones index was down by -1.49%, and the tech-heavy Nasdaq tumbled by -2.04%.

Investors rushed for the exit after data showed that US labour costs accelerated in Q1, led by the government sector.

The employment cost index was 1.2% higher vs 0.9% in the last quarter, well above the 1% expected and above every single forecast in the Bloomberg survey.

“Not a good look as this is the Federal Reserve’s favoured measure of labour costs, and given labour costs are the biggest cost input in a service sector-led economy, such as the US, it can help to keep price pressures elevated,” said a note out of ING Bank.

“This reinforces the prospect of hawkish messaging from the Fed tomorrow,” ING added, referring to the FOMC meeting that began last night and will culminate in a rates decision later today (US time).

To stocks, Amazon popped +2.3% post-market after Q1 results showed a beat on both the top and bottom lines, buoyed by a strong showing from its cloud computing segment.

Starbucks shares sank -12% after the bell as revenue fell -13% in the quarter vs the same period last year.

Eli Lilly, the maker of top selling weight loss drugs Mounjaro and Zepbound, rose +6% after the company raised its annual sales forecast by US$2 billion, citing demand for those two drugs.

Meanwhile, cannabis stocks surged after a report from the Associated Press said the US Drug Enforcement Administration (DEA) will move to reclassify marijuana to a Schedule III drug, or a less dangerous drug.

Read more: Weed Week: Growing excitement for cannabis stocks after marijuana rescheduling hopes in the US


What to expect in May

With May now here, the economic landscape in the first week of the month will be marked by two significant events that could have investors very attentive.

Tonight (US time), all eyes will turn to what the US Fed may offer regarding its plans for interest rates this year. Jerome Powell has hinted that any rate cuts will depend on the evolution of inflation, which has not yet reached the 2% target.

“Expectations of cuts have gradually waned as economic indicators, such as the labor market and inflation, show surprises to the upside,” said Antonio Ernesto Di Giacomo of Xs.com.

Then on Friday, May 3, the Non-Farm Payrolls report will offer a fresh assessment of the health of the US labor market.

“..Any significant deviation from expectations could generate volatility in financial markets,” said Di Giacomo.

“In summary, these early days of May 2024 promise to be intense for investors, with attention focused on the Fed’s actions and critical labor market data.

“Uncertainty regarding future economic decisions and how these events unfold could significantly affect global markets and the economy.”



In other markets …

Gold price fell by almost -2% to US$2,291.26 an ounce.

Oil prices also fell around -1.7%, with Brent crude now trading at US$85.68 a barrel.

The benchmark 10-year US Treasury yield was up 7 basis points (bond prices lower) to 4.69%.

The Aussie dollar plunged by -1.5% to US64.74 cents on the back of the US labour report.

Bitcoin meanwhile was down almost -5% in the last 24 hours to US$60,922.


5 ASX small caps to watch today

Boom Logistics (ASX:BOL)
Boom announced the award of a contract with Newmont Mining at their Boddington Gold Operation in WA. The contract is expected to generate circa $60 million in revenue across the initial five years of the contract, commencing in 4Q FY24. Boom has now secured over $174 million in new contract wins and contract renewals YTD in FY24.

Oncosil Medical (ASX:OSL)
Oncosil announced the results of a study showing that the addition of OncoSil to chemotherapy can significantly increase the vascularity of the primary pancreatic tumours, and at the same time results in a significant decrease in the size of the tumours. This is believed to be the first study in humans demonstrating that the poor vascularity of pancreatic cancer tumours can be increased, which may consequently increase the concentration of chemotherapy agents within the tumour and further explains the mode of action of OncoSil.

Black Canyon (ASX:BCA)
BCA provided an update on activities in relation to production of beneficiated manganese concentrate feedstock from the KR1 and KR2 deposits. Dense Media Separation (DMS) has produced manganese (Mn) concentrates grades of 31.8% Mn and 31.3% Mn from the KR1 and KR2 test samples respectively. These results complement previously announced Heavy Liquid Separation (HLS) concentrates grades ranging between 29.2% Mn & 37.4% Mn also from KR1 and KR2.

Piedmont Lithium (ASX:PLL)
PLL shipped approximately 15,500 dry metric tons of spodumene concentrate in Q1 as North American Lithium (NAL) achieved new quarterly and monthly production records in its ongoing ramp up to steady-state operations. NAL is now projected to achieve full run rate production by H2 of 2024.

Nexus Minerals (ASX:NXM)
Updated JORC 2012 Crusader-Templar combined Mineral Resource Estimate (MRE) came to: 5.67Mt at 1.7g/t Au for 304,000 ounces of gold (0.4g/t cut-off). The update has resulted in a 70% increase in contained gold ounces. Indicated material comprises 46% of the combined MRE.


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