• The ASX is set to open over 1pc higher
  • Oil prices jumped over 3pc after the Saudis announced a production cut
  • The RBA will meet tomorrow to decided on rate setting

 

Aussie shares are set to extend their gains to a third consecutive day as US stocks advanced in New York. At 8am AEST, the ASX 200 index futures was pointing up by +1.05%.

On Friday, Wall Street rose across the board as the US Senate approved the debt ceiling deal. The S&P 500 surged higher by 1.45%, while tech heavy Nasdaq rose by 1.07%.

The Senate passed the bill that would avert the first-ever US default just days before Treasury would have run out of cash. The new law suspends the debt limit through to January 1, 2025.

The crucial US non-farm payroll data shows that US employers added 339,000 jobs in May, well above the consensus estimate of 195,000.

The Fed will next meet on June 13, and some policymakers have indicated a willingness to take a break this month to see what impact its 10 straight rate increases has had on the economy.

To stock news, US telco companies like Verizon and AT&T dropped 3% after Amazon said it might offer free mobile services to Prime members.

Athletic apparel brand Lululemon rose 11% after upgrading its full-year revenue guidance.

The best US stock on Friday was AI-related company MongoDB, which surged 28% after its Q1 top and bottom results beat expectations.

 

RBA’s decision looms

The RBA will meet and decide on interest rates tomorrow.

Analysts believe Governor Lowe will be focused on four main data points: retail sales, employment, the NAB business survey and Consumer Price Index (CPI).

May brought about decidedly mixed reviews. Retail sales are slowing back to normal levels, and the growth is being driven by prices, not volumes.

The May employment report also showed negligible employment growth, and a tick up in the unemployment rate.

The NAB business survey continues to show resilience, albeit coming a little lower.

“As we approach the end of the RBA’s extraordinary tightening cycle, the immediate path is often murky,” said Emma Lawson, a fixed interest strategist at Janus Henderson.

At the moment, the RBA cash rate is sitting at 3.85%, and Lawson believes this rate is the most likely peak despite seeing current market pricing of one further tightening as reasonable.

 

In other markets…

Crude oil prices jumped over 3% after Saudi Arabia announced that it will cut its supply by an extra 1 million barrels a day in July, with the chance of extension. The Saudi energy minister described the cut as a “Saudi lollipop”.

Iron ore price rose by around +1%, while Bitcoin climbed +0.75% in the last 24 hours to US$27,253.

The coders who maintain Bitcoin’s blockchain are clashing over whether to stamp out the meme tokens swarming the network.

According to a report by Bloomberg, a torrent of speculative meme coins led to an 11-fold spike in processing fees on the blockchain in May, creating a logjam and forcing Binance to temporarily halt withdrawals.

 

5 ASX small caps to watch today

Myer Holdings (ASX:MYR)
John King has advised the board that he will be retiring from his role as Myer’s CEO in the second half of calendar 2024, and will return to the US. King joined Myer five years ago, and the company said his Customer First Plan enabled Myer to navigate the pandemic and made it a profitable and stronger business that has returned to paying regular dividends.

S2 Resources (ASX:S2R)
S2R has signed a binding agreement with KG Finland Exploration Oy, which will buy two Exploration Licence Applications from S2’s wholly owned Finnish subsidiary Sakumpu Exploration Oy. Under the terms, S2 will receive a cash consideration of US$175k.

Alpha HPA (ASX:A4N)
The company announced the expansion of existing Letter of Intent with global industrial furnace company, Ebner Industrieofenbau, to include a larger scale roll-out of synthetic sapphire glass production and joint marketing. The expanded agreements follows positive feedback from potential customers and renewable energy providers.

iTech Minerals (ASX:ITM)
Significant high grade graphite assays from Central Lacroma include: LARC23-005 – 28m @ 8.7% TGC from 39m, and LARC23-001 – 37m @ 9.0% TGC from 65m. Mineralisation extends ~200m across strike, from surface to >150m deep.

Cooper Metals (ASX:CPM)
Cooper announced that reverse circulation (RC) drilling has been successfully completed at Ardmore South within the Mt Isa East Copper Gold Project. Thirteen reverse circulation holes for 1,745m were drilled to test several Induced Polarisation and geochemistry targets along a 1.5km trend.

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