Market Highlights: Weak data excites Wall St, RBA’s call, and 5 ASX small caps to watch today
Local shares are poised to open higher on Tuesday. At 8am AEST, the ASX 200 October futures contract was pointing up by 1.75%.
Overnight, Wall St had its best day in two months, with all three major stock indices (S&P 500, Dow Jones and Nasdaq) jumping by around 2.5% each.
The main catalyst for the rally was ironically, a weaker than expected US manufacturing data.
In September, the PMI (which measures manufacturing activities) dropped to 50.9 points (vs forecast of 52.3), the lowest since May 2020.
A reading above 50 indicates expansion in manufacturing, which accounts for 12% of America’s economy.
Treasury yields plunged on the news – 15bp drop for the 10yr, and 9bp for the 2yr.
Gold surged 2.5% on falling yields, crawling back to US$1,700 an ounce. Silver also gained the most since February 2021, up 9% to US$20.70 as traders closed out short positions.
“A new month has Treasury yields in free fall, which is great news for bullion. Downward pressures on inflation are growing and that should put a top on Treasury yields for now,” said OANDA analyst Edward Moya.
In stock news, shares of Credit Suisse whipsawed in Zurich as worries grow over its balance sheet. Some analysts have suggested that the Swiss bank is on the verge of collapse and have made comparisons to Lehman Brothers.
Energy traders are anxiously awaiting the outcome of the first ever in-person OPEC+ meeting since 2020, tomorrow (EU time).
Expectations are high that OPEC+ will deliver the biggest reduction in output since the beginning of the pandemic, probably as high as 1 million barrels a day.
In other markets, the AUD jumped to 2% to US65.2c, while Bitcoin also climbed 2% to US$19,564.
Back home, the RBA will announce its interest rates decision to the media at 2.30pm today. The big question will be whether it will raise rates by 25 or 50 bps, and it’s going to be a close call.
Scott Solomon, Associate Portfolio Manager of T. Rowe Price said that he predicted the RBA would again hike 50bps.
“Global inflation is running extremely high, the US Fed Reserve has increased its 2022 year end rate projection by an additional 100bps in just the months. In response, the Australian dollar has suffered,” said Solomon.
“While the RBA has noted a preference for a weaker Australian dollar, it’s now approaching tenuous levels which somewhat forces the hand of the RBA,” said Solomon.
EMVision Medical (ASX:EMV)
EMV has received a Human Research Ethics Committee (HREC) approval for its multi-centre clinical study which will take place in Melbourne and Sydney. The study is expected to show that EMVision’s portable brain scanner can provide crucial insights to enable clinicians to make critical decisions earlier, when time matters, at the point-of-care. The HREC approval also means that a further $1.2 million in milestone payments were triggered under the Australian Medical Research Future Fund (MRFF) grant program and will be paid to EMV.
Little Green Pharma (ASX:LGP)
LGP has partnered with German cannabis pioneer Cannamedical for the supply of bulk medicinal cannabis from Denmark to Germany, with a potential value of over $4.5 million (€3 million) over two years. LGP now has medicinal cannabis supply agreements with four key wholesalers and distributors in Germany.
Podium Minerals (ASX:POD)
Podium announced that 5E PGM results have been received for 30 of the 53 drill holes drilled as part of Stage 10 at its Parks Reef PGM Project in WA. The 5E PGM intersection highlights include 34m at 1.87g/t 5E PGM.
Askari Metals (ASX:AS2)
Askari has expanded its Eastern Pilbara lithium portfolio with the acquisition of the Talga East Lithium Project. The area is highly prospective for Lithium-Tin-Tantalum (Li-Sn-Ta) mineralisation, and is located less than 20km north of the Global Lithium Resources’ (ASX.GL1) Archer Deposit.
Bigtincan (ASX:BTH) and Livetiles (ASX:LVT)
Both companies made a joint statement which confirmed media speculation that BTH is about to acquire 100% of LVT. Under the proposal, LVT shareholders would be entitled to receive 7c cash per share, less any dividends or distributions paid to shareholders after the date of the proposal.