Market Highlights: Wall Street rebounds, Tesla downgraded, and India's climb on global ladder

The ASX is set to fall despite a rebound on Wall Street
Fed Chair Jerome Powell sees one, or perhaps two more hikes before year end
India PM gets White House state banquet

Aussie shares are set to extend their losses on Friday despite a rebound on Wall Street. At 8am AEST, the ASX 200 index futures was pointing down by -0.15%.

Overnight, US stocks bounced back as the second day of Fed Chair Jerome Powell’s testimony before Congress took centre stage.

At the close, the S&P 500 was up 0.37%, and tech heavy Nasdaq climbed 0.95%.

Powell told the House Financial Services Committee hearing that he sees one, perhaps two, more rate rises before the year is over.

“It will be appropriate to raise rates again this year, and perhaps twice, if the economy performs about as expected, even as they’ve been hiked to an appropriately restrictive level.”

So it’s almost a kiss goodbye for any hopes of an interest rate cut in the second half of 2023 where at the start of Q2, the expectations have been a cut of 75 bps to 100 bps.

To stock news, Tesla shares lifted 2% after Morgan Stanley downgraded the stock from Overweight to Equal Weight, while raising the price target from US$200 to US$250.

Boeing slipped 3% after workers at its supplier Spirit AeroSystems announced a strike from June 24.

Elsewhere, the Bank of England (BoE) lifted its cash rate once again by 50bp to 5%, a 15-year high.

It was the 13th successive increase since December 2021 as the BoE fights a UK inflation rate of 8.7%, the highest in 30 years.

India on the rise

The White House is hosting a state dinner that’s entirely plant-based – no meat, no dairy and no eggs – for Indian PM Narendra Modi, who is a strict vegetarian.

One major topic between Modi and Biden will be China. American companies are looking to diversify their manufacturing base, and India has been seizing that opportunity.

Apple has shifted some iPhone production from China to India, and around half of IBM’s workforce is now located in India.

Biden is also likely to authorise General Electric to make F414 engines in India.

In addition, Modi received a promise from Tesla after Musk, a self proclaimed Modi fan, told the PM that he intends to make significant investments in the country.

In other markets …

Crude oil prices tumbled 4% as the US Energy Information Administration reported an inventory decline of 3.8 million barrels for the week.

Gold price also skidded 1% to US1,913.68/ounce despite some less hawkish than expected testimony from Powell.

Bitcoin meanwhile climbed 0.4% in the last 24 hours to US$30,068.

At his testimony before Congress, Powell said that cryptocurrencies, like Bitcoin, have “staying power.”

“We do see payments X as a form of money, and in all advanced economies, the ultimate source of credibility in money is the central bank,” Powell said.

“We believe that it would be appropriate to have quite a robust federal role in what happens in stablecoins going forward.”

5 ASX small caps to watch today

Invex Therapeutics (ASX:IXC)
Invex announced the granting of orphan drug designation (ODD) from the European Medicines Agency (EMA) for Exenatide in the treatment of moderate to severe Traumatic Brain Injury (TBI). This is the second ODD for Exenatide in Europe, with Invex receiving an ODD for Idiopathic Intracranial Hypertension (IIH) in 2017, alongside an ODD from the US DA also for IIH.

Orbital Corporation (ASX:OEC)
OEC signed a new contract valued at approximately $1.1 million for the manufacture and supply of heavy fuel engine systems, spare parts and in service technical support with a new customer. Under the terms, delivery of the Orbital UAV-designed unmanned aerial vehicle engines is scheduled for the second half of FY24, to a defence agency organisation, Finance International PL.

Atlas Pearls (ASX:ATP)
The pearls producer says revenue for the year ending 30 June is expected to be between $26m – $28m, compared to $21.5m in FY22. The increase in expected revenue reflects a highly successful sales auction in Japan earlier this month, underscoring the strength of the pearl market with a strong demand at high prices.

AVADA Group (ASX:AVD)
The traffic management services provider announced it has entered into a formal 49-51 joint venture arrangement with Maranirra Indigenous Services to establish a new traffic management company, Bilingarra Indigenous Services. The new JV company has two objectives: build a sustainable indigenous business, and provide opportunities for indigenous peoples and give back to the community, through the workplace.

Iceni Gold (ASX:ICL)
Iceni provided an exploration update on the 14 Mile Well Project. Analysis of UFF+ soil and rock chip assays have identified new and significant nickel and lithium targets, in addition to the existing gold targets, within Iceni’s 14 Mile Well tenement package. These include: Four large UFF+ nickel soil anomalies (1.6-4.5km long), and two large UFF+ lithium soil and rock chip anomalies (3-10km long) with a strong association with Li-Cs-Be-Rb.

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