Market Highlights: Wall Street loses steam, the 4 biggest risks in 2024, and 5 ASX small caps to watch

ASX to fall after a big late selloff in New York
More optimism after inflation in UK and Germany drops, and a surge in US homebuilding
The four most significant risks in 2024, according to this expert

Aussie shares are poised to open lower on Thursday after a big late selloff in New York. At 8am AEDT, the ASX 200 index futures was pointing down by -0.6%.

Overnight, the S&P 500 tumbled by -1.47%, the blue chips Dow Jones index was down by -1.26%, and the tech-heavy Nasdaq crashed by -1.50%.

Traders mainly just took a breather and some profits after the record-setting rally over the past few weeks.

Data from the US housing market offers hope the economy will avoid a recession next year. According to a report from the US Commerce Department, US single-family homebuilding surged to more than a 1.5-year high in November, and could gain further momentum if mortgage rates decline.

Optimism was further lifted after a surprise drop in UK inflation to its lowest level in two years, as well as easing in German wholesale inflation.

All eyes will now turn to the US GDP data tonight and the US PCE Inflation data on Friday for clues on what the Fed would do next.

To stocks, FedEx, a stock seen as a bellwether for global economic trade, cratered by -12% following dismal quarterly results, including a 60% drop in its air-based Express unit.

The best mover last night was outdoor landscape equipment specialist, Toro Company, which jumped 9% as it reported better than expected Q4 earnings.

The 4 most significant risks in 2024

Looking ahead, investors will be facing myriad uncertainties that pose substantial risks to the stability and performance of global markets.

According to Nigel Green, the CEO and founder of deVere Group, there are four significant risks confronting global markets in 2024.

Middle East crisis escalation

“Any escalation could disrupt global oil supplies, leading to increased market volatility. Investors are closely monitoring the situation, as heightened tensions may have profound implications for energy prices and overall market stability,” Green said.

“Industries tied to energy, transportation, and commodities could experience significant fluctuations. Diversification and risk management strategies will be crucial for investors to navigate potential geopolitical shocks emanating from the Middle East.”

Resurgent inflation

“While inflation witnessed a decline from its 2022 peaks in most major economies, including the US, UK and eurozone, the spectre of resurgent inflation remains a critical risk in 2024,” Green said.

“Energy prices, a major driver of inflation, are known for their volatility, and any sudden surge could lead to an increase in the headline inflation rate.

“Corporate earnings could be impacted, and the heightened risk of recession may lead to a reassessment of investment portfolios. Investors must remain vigilant and adjust their strategies in response to changing inflation dynamics to preserve capital and optimise returns.”

Elections across the globe

“2024 is marked by decisive elections in over 40 countries, representing more than 50% of the world’s GDP,” said Green.

“Key players, including the UK, the US, China, India, Taiwan, South Korea, Ireland, South Africa and others, are set to undergo electoral processes that could have far-reaching consequences for global markets.

“Investors are likely to face increased volatility in the lead-up to and aftermath of elections. Shifts in political landscapes typically result in policy changes that impact various sectors, prompting investors to reassess their portfolios.”

China’s growth crisis

“Contrary to earlier forecasts, China’s post-COVID-19 reopening has not led to the anticipated growth in 2023,” said Green.

“As we enter 2024, the prospect of China’s economic stagnation looms large, carrying implications for trade partners and global markets.

“Investors with exposure to China or industries heavily reliant on Chinese demand may face challenges if the economic downturn persists. Supply chain disruptions, reduced consumer spending, and market volatility could ensue, impacting the performance of multinational corporations.”

In other markets …

Gold price fell by -0.5% to US$2,029.98 an ounce.

Oil prices traded flattish, with Brent now trading at US$79.25 a barrel.

US 10-year Treasury yield fell 6 basis point to 3.85%.

Iron ore futures rose +0.15% to US$134.85 a tonne.

The Aussie dollar gave up recent gains, down -0.4% to US67.31c.

Meanwhile, Bitcoin surged +3% in the last 24 hours to US$43,626.

5 ASX small caps to watch today

Immutep (ASX:IMM)
Immutep received constructive feedback from the Paul-EhrlichInstitut (PEI), a German regulatory authority, regarding the planned TACTI-004 Phase III trial of eftilagimod alpha (efti) for first line treatment of metastatic non-small cell lung cancer (NSCLC). The PEI is supportive of Immutep moving into a registrational trial in first line NSCLC and evaluating efti in combination with an anti-PD-1 therapy in a chemotherapy-free regimen, or with an approach that includes chemotherapy. Also, the PEI acknowledged the good safety profile of efti in combination with anti-PD-1 therapy.

Novo Resources (ASX:NVO)
Novo has executed agreements with Calidus Resources (ASX: CAI) to divest its Nullagine Gold Project in the East Pilbara region on 20 December, with completion occurring on 21 December. Calidus has assumed all obligations, royalties, claims and liabilities relating to the Project. Novo has received completion consideration of $250,000 in CAI shares, and has a right to receive a further $5 million in deferred consideration subject to the achievement of a production milestone relating to the Project assets.

Altech Batteries (ASX:ATC)
Altech announced exceptional results from a Definitive Feasibility Study (DFS) conducted for an 8,000tpa (120 GWh) aluminacoated metallurgical silicon plant planned for Saxony, Germany. This facility is set to produce cutting-edge and patented alumina-coated silicon battery anode materials known as “Silumina Anodes”. This product, manufactured exclusively under license from Altech, is strategically aimed at meeting the escalating demand in the European and US electric vehicle and grid storage battery market.

Krakatoa Resources (ASX:KTA)
Krakatoa provided an update on the 6,000 metre Phase 2 pegmatite exploration drilling program at the ex-tantalum mine, King Tamba. The program has progressed very well with a total of 3938m completed and 27 holes drilled to date. 75% of drillholes completed have intersected pegmatites, with intersections up to 39m downhole width. The field crew and drillers have demobilised from site for the planned festive season break and will return in January.

Metals Australia (ASX:MLS)
MLS has received highly-anomalous lithium-caesium-tantalum (LCT) results from rock chip sampling of the CR1 pegmatite – adjoining Patriot Battery Metals’ (ASX:PMT) ‘s Corvette lithium discovery in the James Bay region of Quebec, Canada. The LCT pegmatite discovered at CR1 has been mapped across the entire 1.6km width of the company’s Felicie tenements along the Corvette lithium trend, and over a 100m thick zone. MLS will now seek government approvals to launch a priority channel sampling and drilling program across the entire width of the CR1 LCT pegmatite discovery.

At Stockhead we tell it like it is. While Altech Batteries and Krakatoa Resources are Stockhead advertisers, they did not sponsor this article.