Market Highlights: Wall Street struggles off the mat, and 5 ASX small caps to watch on Thursday
Local shares are set to open modestly higher today. At 8am AEST, the ASX 200 September futures contract is pointing up by just 2 points.
Overnight, Wall Street was volatile and erased earlier losses after investors rushed in at the final hour of trading.
At day’s close, the S&P 500 was up 0.3%, the Dow by +0.1%, and tech heavy Nasdaq by +0.7%, following the biggest drop in more than two years the previous day.
Recession risks are going up now that the Fed will likely need to take rates above 4.00%.
“But it is still unlikely we will see them take rates to the 5.00% level,” says OANDA analyst, Edward Moya.
The US PPI (producer price index) fell by 0.1% in August after a 0.4% fall in July, signalling that underlying trends are actually improving.
“That should lead to optimism that we will continue to see prices come down over the next few months,” said Moya.
The possibility of a recession however should not be discounted, as the US 2-year vs 30-year spread is the most inverted in over 20 years.
An inverted curve, where the short end yield is higher than long end, signals a possible recession as bond traders put their money in longer dated maturities (pushing those yields lower).
In company news, Starbucks lifted 5.5% after raising its three-year profit and revenue outlook. Starbucks said it plans to increase the amount of stores in China, its second largest market, by 50% to 9,000 stores by 2025.
Oil prices gained 1% with benchmark Brent crude trading at US$94.36 a barrel as the Ukraine president vowed to take back Crimea from Russia – potentially prolonging the already 7-month-old war.
China has also begun to ease some of its COVID lockdowns.
“The next major move in crude was always going to be triggered by the world’s biggest oil consumer and the loosening of lockdown restrictions should put a firm bottom in place,” said Moya.
Moya believes oil could find a home above the US$100 level, but it might struggle to extend from there.
Spot gold has slipped through the psychological level of US$1,700, trading now at US$1,696 an ounce.
According to the technical charts, US$1,680 looks likely to be the next resting point for gold and it’s going to be a nervy week ahead for gold bulls.
The Fed’s next monetary decision on September 21 will likely determine the fate of the yellow metal.
In other markets, the iron ore price slipped by -3.3% to US$100.80 a tonne and Bitcoin was unchanged at US$20,212.
Looking ahead to today’s trading day, Australia’s unemployment rate for August will be released, along with inflation expectations.
Zelira Therapeutics (ASX:ZLD)
Zelira has now completed enrolment of two-thirds (40 subjects) for the clinical trial for diabetic nerve pain, announced in July last year. Zelira expects to complete trial enrolment and provide a trial read out in Q4 2022.
Pacific Nickel Mines (ASX:PNM)
Pacific Nickel Mines has been awarded a Mining Lease for the Kolosori Nickel Project in the Solomon Islands. Operations are now focused on finalisation of the Definitive Feasibility Study (DFS). The company expects the project to ramp up to full production (around 1.3 million wet metric tonnes per annum of direct shipping nickel ore) during 2023.
Kingston Resources (ASX:KSN)
Gold production at the Mineral Hill Mine in NSW has increased significantly in the first two months of the September quarter. Production has delivered sequential monthly gold production records in July (1138 ounces) and August (1203 ounces).
Dotz Nano (ASX:DTZ)
The tech company has secured $5.15 million investment to accelerate its R&D, marketing and development of Theracell Labs Project. The investment was made by New York-based Lind Partners, an institutional fund manager. Funds raised to be used to accelerate development of Theracell Labs Project, Oil & Gas solutions, and develop other commercial partnerships in DOTZ verticals.
Tyro Payments (ASX:TYR)
Tyro announced the appointment of Jonathan Davey as its new chief executive officer (CEO). Davey is currently CEO of Tyro’s health business Medipass, having joined Tyro in May 2021 after Tyro bought the company. His appointment follows the resignation of ex CEO, Robbie Cooke.