• Local shares to open lower as Wall Street struggled overnight
  • US bond yields at 16-year high, suggesting lower Fed rate cut bets
  • Expert predicts what would happen to dividends this earnings season


The ASX is set to open lower this morning as Wall Street struggled to maintain momentum. At 8am AEST, the ASX 200 index futures was pointing down by -0.3%.

Overnight, the S&P 500 fell by -0.28%, blue chips Dow Jones by -0.51%, and the tech heavy Nasdaq index closed flat.

Nvidia touched an intraday record before retreating ahead of its earnings which should be a major test for AI demand.

“A miss could lead to huge disappointment and thereby a sizeable fall in the stock,” said XM analyst, Charalampos Pissouros.

Dicks’s Sporting Goods plunged -24% after saying that theft, or specifically ‘smash and grab’, has eaten into its profits.

Macy’s dropped 14% despite posting a Q2 earnings beat.

Meanwhile, the 10-year Treasury yield stood at 4.33%, which is a 16-year high on fears over rates outlook.

These levels suggest that traders are pulling back on their Fed rate cut bets.

Data from Bloomberg shows that just 100bp rate cut is now priced into the market through to next year, from 150bp a few weeks ago.


Bright outlook for dividends on the ASX

Earnings season continues on the ASX, and today’s reporting schedule includes Corporate Travel (ASX:CTD), Domino’s Pizza (ASX:DMP), Iluka (ASX:ILU), Santos (ASX:STO), and Woolworths (ASX:WOW).

We’re now roughly one-third of the way through reporting season.

According to Chris Haynes, head of Equities at Equity Trustees Asset Management, 40% of companies that have reported have beaten earnings expectations.

And so far, dividends have also surprised to the upside.

Commonwealth Bank (ASX:CBA) delivered a better than expected dividend which was well supported by its excess of capital, raising its payout ratio.

“Other companies like Carsales (ASX:CAR) which have experienced good growth, have also rewarded their shareholders with increased dividends, above expectations,” said Haynes.

Telstra delivered a solid result and dividend with growth in both expected in FY24.

“As expected, interest and operating costs have been rising in line with inflation; putting pressure on the profit and loss of all companies – especially property trusts,” said Haynes.

“This sector has seen the most pressure on earnings and dividends, with downgrades the order of the day.

“For FY24, we have also seen the outlook for dividends upgraded for the market for the first time in a few months.

“This week is the big week with the large resource companies unlikely to pay excessive dividends, given they all now seem to be in expansion mode,” Haynes added.


In other markets …

Gold rose by +0.10% overnight to US$1,896.01 an ounce.

The Aussie dollar still trades close to the US63c handle, now at US64.22c.

Now read: Why a free-falling Aussie dollar could be good news for investors and these ASX stocks

Brent crude fell almost 2%, trading now at US$83.77 a barrel.

Oil prices have been falling due to the higher USD and expected soft demand from China.

Iron ore 62% fe was up by +0.3% to US$106.77/tonne.

Bitcoin meanwhile lost -2% in the last 24 hours to US$25,673,

According to chartists, Bitcoin is currently at the beginning of its fourth ‘bull box,’ which might peak at US$200,000 by the end of 2025 or early 2026.

A bull box pattern is a chart pattern that occurs when an asset is in a strong uptrend.


5 ASX small caps to watch today

Turners Automotive (ASX:TRA)
The NZ-based used car dealer announced that it’s expecting FY24 to be another record profit result. Positive trading results so far have the FY24 result ahead of the record FY23 result of $45.5m NPAT. The forecasted dividend is expected to be at least 24 cents per share, up +4% on the pcp.

Retail Food Group (ASX:RFG)
RFG reported underlying revenue for FY23 of $98m, which was up 8% on pcp. Underlying EBITDA was $26m, up 21% on pcp. The company also says it has a solid balance sheet with 3-year debt funding secured through to 2026 and minimal net debt.

Emeco Holdings (ASX:EHL)
The mining services company delivered record group revenue of $875 million for the full year, up 16% on pcp. Operating NPAT however was down 14% vs pcp to $59 million. Emeco says the outlook for FY24 is positive, with momentum achieved in H2 FY23 expected to drive earnings growth. The business continues to focus on cost efficiencies and contract repricing, to drive margins and returns.

Neometals  (ASX:NMT)
Neometals announced that Primobius, the battery recycling incorporated JV company owned 50:50 by Neometals and SMS Group, has received a purchase order for supply of a 10 tonne per day spoke with Mercedes. The Mercedes recycling plant installation is scheduled to commence in Q4 2023, immediately after building completion.

Comms Group (ASX:CCG)
The telco services company says full year total group operating revenue was $51.9m, up 27% on FY22. Full year underlying EBITDA was $4.8m, up 17% on FY22. FY24 revenue is anticipated to be in the range of $53m to $55m. FY24 underlying EBITDA is anticipated to be in the range of $6.5m to $7m.