• The ASX is set to open slightly higher despite the fall on Wall Street
  • US wholesale prices jumped in January, suggesting that inflation remains sticky
  • WallStreetBets founder sued Reddit

 

The ASX looks poised to extend yesterday’s gains despite a slump in New York. At 8am AEDT, the ASX 200 Feb futures contract was pointing up by 0.10%.

Overnight, all major stock indices on Wall Street fell by around 1% each after a hot PPI reading and comments from Cleveland Fed President Loretta Mester.

US wholesale prices (or PPI) jumped 0.7% in January, the biggest gain since last summer and an indication that inflation remains sticky.

Cleveland Fed President Loretta Mester earlier said she has seen a “compelling case” for a 50bp rate hike at the next FOMC meeting.

“At this juncture, the incoming data have not changed my view that we will need to bring the fed funds rate above 5 per cent and hold it there for some time,” she said.

In stock news, space firm Virgin Galactic rose by as much as 8% after conducting its first test flight in a year. The company’s share price has risen by 72% this year.

EV battery maker QuantumScape Corp crashed 19% after it told investors “we must continue to improve cell reliability as we move from prototype to product.”

Tesla dropped 5% after announcing that it will be recalling hundreds of thousands of vehicles after authorities in the US said the company’s automated-driving technology could increase the risk of a crash.

The company meanwhile said it will make 7,500 of its chargers (out of ~17,700) available to drivers of vehicles made by other automakers by the end of 2024.

The founder of the popular Reddit forum WallStreetBets, Jaime Rogozinski, is suing Reddit.

Rogozinski accused the social media platform of illegally kicking him out from his role moderating WallStreetBets, a forum that pumped meme stocks to the moon.

In commodities, crude prices are pushing lower despite the hot PPI report, with WTI trading down 0.5% to US$78.21 a barrel.

Analysts however believe the oil market should remain tight, given how strong the outlook remains over the short-term.

“The world’s two largest economies are likely going to consume more oil over this period, and that should keep WTI crude well supported at the mid-$70s,” said Oanda analyst, Edward Moya.

The iron ore price was up 1%, and gold was flat overnight.

After the big rally yesterday, Bitcoin has climbed by another 2% in the last 24 hours to US$24,559.

According to Lookonchain, there has been a major wave of institutional money coming into the crypto exchanges over the past week, around $1.6 billion.

“Every day that passes that we don’t see Bitcoin break, sellers become less patient,” said Moya.

Looking ahead to today’s session, Reserve Bank Governor Philip Lowe is set to give his closely watched testimony in Parliament.

 

5 ASX small caps to watch today

Piedmont Lithium (ASX:PLL)
Piedmont has signed a deal with LG Chem, under which LG Chem will make a $75m equity investment in Piedmont, and commit to the offtake of 200,000 metric tons of spodumene concentrate (SC6) from Piedmont’s jointly owned North American Lithium over a four-year term.

Baby Bunting (ASX:BBN)
Total sales for the half year were $254.9 million, up 6.6% on the pcp. Bottom line statutory NPAT was $2.7 million versus $8.1 million a year ago. The company declared a fully franked interim dividend of 2.7 cents per share.

Etherstack (ASX:ESK)
Revenue for the full year was up 14% on pcp to US$9.68m. EBITDA grew by 33% to US$3.4m. Bottom line NPAT rose by 51% to US$2.2m. During the year, Etherstack struck strategic business deals with Samsung, Nokia and Rio Tinto.

Aumake (ASX:AUK)
Aumake has executed a Debt Release Deed whereby Grand Aust and Grand Aust New Zealand have agreed to convert $1,423,094 of debt into Aumake equity. Being able to convert $1.4 million of debt, at a 120% premium to the prevailing share price, is very encouraging news that significantly improves the company’s prospects and growth ambitions, said Aumake’s chairman, Stephen Harrison.

PeopleIn (ASX:PPE)
Revenue for the first half was $596.7m, up +88.9% on pcp. Organic growth contributed +21.3% of that. Bottom line normalised NPATA was $20.8m, up +49.5% on pcp. PeopleIn has also reaffirmed full year FY23 earnings guidance with normalised EBITDA of $62m-$66m. Based on the continuation of current economic conditions, the company expects to be at the upper end of that guidance.