• The ASX will open lower despite a rally on Wall Street
  • Earnings season in the US will pick up speed later this week
  • Consensus suggests S&P earnings will shrink by 9% this quarter

 

Aussie shares are set to open lower on Tuesday despite Wall Street resuming its rally. At 8am AEST, the ASX 200 index futures was pointing down by -0.2%.

Overnight, the S&P 500 closed 0.39% higher while tech-heavy Nasdaq climbed 0.93%.

The US earnings season is still in focus, and later this week we’ll see results from companies including Tesla, Netflix, and Goldman Sachs.

Tesla’s share price rallied over 3% last night after announcing that it has built the first Cybertruck at its gigafactory in Texas after two years of delays.

Apple lifted almost 2% after Morgan Stanley raised its target price to US$220 (vs current price of US$194), saying that Apple’s business in India could be worth US$40 billion over the next decade.

“The key to the stock market remains the mega-cap tech trade, and many traders won’t do any major positioning until we hear from Netflix and Tesla,” said Oanda analyst, Edward Moya.

Now read: Tech-Heavy: Netflix and Tesla get naked this week. What we see could be shocking, but important…

Meanwhile, China’s slowdown could be the biggest catalyst for a market downturn. Data yesterday showed that China’s GDP in the April-June period grew by 6.3%, much lower than the 7.3% economists had predicted.

 

Earnings and S&P 500 prediction

The prediction for the stock market over the coming months remains vague, however what seems certain is the bullish earnings season currently underway.

So far, 77% of companies in the S&P 500 that have reported their earnings have beaten analysts’s predictions on earnings per share, according to BofA data.

That number is down from last quarter’s 90%, but is still up from the historical average of 67%.

“The consensus however suggests that S&P earnings will shrink by 9% in the second quarter, and hit their lowest point in Q3 before a revival comes in 2024,” said market analyst, Chelsea Johnson.

“And while predictions for the S&P 500 in 2023 have been adjusted upwards by many strategists, many expect the index will experience a downturn by the year’s end.”

According to Bloomberg, the average strategist predicts a 6.6% fall in the S&P 500 index in the second half of the year due to a mild recession.

 

In other markets …

Gold traded flattish at US$1,954.80 an ounce.

Analysts believe that gold’s rebound will have to take a break until we know for sure if the Fed is done raising rates at the July 26th FOMC meeting.

Crude oil prices tumbled by around -1.7%, with WTI now trading at US$74.18 a barrel.

“Oil won’t catch a bid unless China finally unleashes meaningful stimulus that propels large parts of the economy,” said Moya.

Bitcoin meanwhile was down -0.55% in the last 24 hours to US$30.183.

Fund manager Cathie Wood has doubled down on her prediction of a US$1.5m Bitcoin price she made in February, saying that she’s “very positive” on Coinbase – which is the second largest holding in her ARKK fund.

 

5 ASX small caps to watch today

Plenti Group (ASX:PLT)
Non-bank lender Plenti has achieved record loan originations, with the loans portfolio increasing to $1.90 billion in the quarter, which was 32% above pcp and 8% above prior quarter. The company’s automotive loan book also reached the $1 billion milestone during the quarter. Plenti says its FY24 objectives include growing its revenue to over $200 million.

Black Cat Syndicate (ASX:BC8)
BC8 announced the completion of the Coyote Gold Operation scoping study. Study highlights include: initial mine production target of ~200koz @ 3.6g/t Au, to be mined in the first 5 years of operation. Average recovered ounces of ~44kozpa, with peak production of ~55kozpa in years 3 and 4, and significant potential to increase the annual production rate and mine life.

Canterbury Resources (ASX:CBY)
Soil sampling has been completed over the Briggs porphyry copper-molybdenum system in Queensland. The soil copper anomaly at Briggs now measures 2,300m long and up to 1,000m wide at >500ppm copper. The recently published Mineral Resource Estimate (MRE) for the project correlates closely to the 500ppm Cu contour wherever tested by drilling. A revised exploration target of 480Mt to 880Mt at 0.20% to 0.30% Cu and 25ppm to 40ppm Mo has been defined.

Future Battery Minerals (ASX:FBM)
Diamond drilling component of the Phase 2 exploration drilling at the Kangaroo Hills Lithium Project has returned high-grade lithium (Li) assay results, including: 23m @ 1.19% Li2O from 44m (KHDD001), and 10m @ 1.30% Li2O from 25m (KHDD002).

Alicanto Minerals (ASX:AQI)
3D modelling of historic Falun Mine has highlighted high‐priority near mine targets. The historic Falun mine produced 28Mt at 4% copper, 4g/t gold, 5% zinc, 2% lead and 35g/t silver. The newly identified zones sit outside the historic mine and are not impacted by historical mining voids. Newly compiled, previously unreleased historical intersections outside the mine area include: 15.5m @ 2.0% copper, and 6.6m @ 2.8% copper, 1.4g/t gold.

 

At Stockhead we tell it like it is. While Black Cat Syndicate, Future Battery Minerals, and Alicanto Minerals are Stockhead advertisers, they did not sponsor this article. 

Read MoreSmall Caps

Featured Companies

You might be interested in