Market Highlights: Wall Street rallies, who the hell is VinFast, and 5 ASX small caps to watch

Local shares set to open higher after a rally on Wall Street
Vietnamese EV maker becomes world’s third most valuable automaker
Expert says the RBA could keep on raising rates

The ASX is set to open higher again on Tuesday after another rally on Wall Street. At 8am AEST, the ASX 200 index futures was pointing up by +0.4%.

Overnight, the S&P 500 and Dow Jones rose by +0.6%, while tech heavy Nasdaq climbed +0.84%.

Nasdaq-listed Vietnamese electric-vehicle maker VinFast Auto jumped 20% to become the world’s third most valuable automaker – only behind Toyota and Tesla.

VinFast’s market cap now sits at US$190bn, more than the likes of Boeing, which is at US$137 billion.

Chinese EV maker Xpeng rose more than 5% after announcing it will pay up to US$744 million for ride sharing giant’s DiDi Global’s electric car development business. The deal has joined together two of the most prominent Chinese tech companies.

3M Company rose 5% after WSJ reported that it was close to a US$5.5bn settlement on claims from hundreds of thousands of veterans over faulty earplugs.

Meanwhile, Exxon Mobil says the world will fail to reach the 2 degrees celsius Paris Accord goal on emissions by 2050. Exxon projects the world’s CO2 emissions will be 25 billion metric tons in 2050, more than twice the 11 billion set by the Accord.

Back home, earnings season continues on the ASX, and today’s reporting schedule include: Zip Co (ASX:ZIP), Star Entertainment (ASX:SGR), Adbri (ASX:ABC), and Mineral Resources (ASX:MIN).

Aussies could face ‘significant hardship’ because of rates – expert

Australians can brace for further interest rate increases in the second half of the calendar 2023, says Mishan Dahia, investment analyst of the asset consulting firm Atchison.

Dahia believes the RBA will persist in raising rates in the second half, with each month being actively monitored for potential changes as inflation moderates downward.

This will bring significant hardship to many Australian mortgage holders transitioning from fixed to floating rate loans.

“It means the reduction in disposable income will be substantial, due to both the rate of adjustments and the cumulative effect of previous rate increases, that have not yet been transferred to borrowers,” said Dahia.

Dahia remains unconvinced that falling inflation means the end of interest rate rises in the immediate future.

He also expects the Australian economy to grow at a slow rate, with corporate earnings put under greater pressure in the face of persistently high inflation and higher interest rates.

“But despite these headwinds, we are still long Australian equities and feel comfortable holding quality names at the right valuation,” he added.

In other markets …

Gold jumped by 0.3% overnight to US$1,920.77 an ounce.

Oil prices rose +0.3%, with WTI trading now at US$80.05 a barrel.

The crude market reacted to a series of steps taken by China on Monday to bolster its flagging economy, including the halving of stamp duty on stock trading.

Iron Ore 62% fe traded flat at US$108.31/tonne.

The Aussie dollar gained 0.2% to US64.30c.

Bitcoin meanwhile slipped 0.15% the last 24 hours to US$26,009.

Data shows that amid a challenging year for Bitcoin, 16 publicly traded Bitcoin mining companies in the US have accumulated over $4.47 billion in losses in the past 12 consecutive months (TTM). The list of companies include Core Scientific and two crypto mining companies owned by BlackRock.

5 ASX small caps to watch today

Zip Co (ASX:ZIP)
For the full year, Zip reported record group revenue of $693.2m, up 16.1% YoY. Record transaction numbers of 72.7m, up 8.3% YoY. Group net bad debts of 2.0% of TTV, down from 2.7% in FY22), in line with target range.

Echo IQ (ASX:EIQ)
EIQ announced an important pilot agreement with Advara HeartCare WA, Australia’s largest cardiology healthcare provider for the deployment of the company’s AIbacked EchoSolv technology which is used to detect numerous forms of structural heart disease. Pending successful completion of the paid pilot, EchoSolv will be considered for rollout to multiple Advara HeartCare sites across Australia.

BikeExchange (ASX:BEX)
The global cycling-related online marketplace announced the completion of its new AI (Artificial Intelligence) enhanced consumer platform, which significantly improves the e-commerce experience for its 15 million consumers, The new AI platform is the largest technology project that BEX has delivered on since its inception in 2007. BEX has invested around $700k in this new platform over the past eight months, and will be progressively rolling out the new solution across all geographies.

Mad Paws (ASX:MAD)
Full year revenue was up 145% on pcp to $24.6 million. Gross merchant value was up 117% on pcp to $58.9m. The company says it sees a pathway to being cashflow positive and EBITDA positive in FY2024, with cash on hand at 30 June of $3.1m.

Knosys (ASX:KNO)
The SaaS company says recurring revenue was up 16% on pcp, while full year total revenue was up 12% to $9.9 million. The company’s bottom line was a net loss after tax of $2.2 million, an improvement of 28% on the pcp.