• ASX to open muted despite a mini rally on Wall Street
  • US stocks rose after weak jobs and GDP data
  • Bonds are a good buy at current levels, says expert

 

The ASX is set to open flattish on Thursday after US stocks closed modestly higher in New York overnight for a fourth-straight day of gains.

The S&P 500 rose +0.38%, blue chips Dow Jones was up by +0.11%, while tech heavy Nasdaq climbed +0.54%.

The market reacted to some weak data releases, including US GDP data which showed the economy grew 2.1% in Q2 compared with an official estimate of 2.4%.

Meanwhile the ADP payroll employment rose by 177,000 in August, vs survey of +195,000 – another data point that proves the US economy is slowing.

“Weaker data makes possible a scenario where additional interest rate hikes will be limited or perhaps even nonexistent,” said Daniel Jones of Crude Value Insights.

US Treasury yields dropped and most currencies rallied against the US dollar after the GDP and job prints.

To stock news, Apple and Nvidia led the gains in megacaps, rising by 1-2% each.

Apple announced that it was testing the use of 3D printers to produce the steel chassis used to make some of its upcoming smartwatches.

Visa and Mastercard rose on plans to increase the fees that merchants pay when accepting customers’ credit and debit cards.

Back home, it’s the last day of the earnings season, and today’s reporting schedule includes: Harvey Norman (ASX:HVN), Sandfire (ASX:SFR) and Atlas Arteria (ASX:ALX).

 

Bonds look more attractive after GDP and jobs data – expert

With the weak jobs and GDP data last night, experts believe bonds are a good buy at these levels.

“The 10-year Treasury in my mind is a screaming buy,” BMO Capital Markets’ Ian Lyngen told Bloomberg Surveillance.

“I think that from here, the path forward for nominal 10-year yields is going to be lower.”

Lyngen says these latest data, along with lower consumer confidence, suggest the Fed’s rate hiking campaign is having the cooldown effect the central bank has been seeking.

Lyngen says he now sees a 3% yield on 10-year Treasuries sometime in 2024’s first half, versus the current 4.11%.

“But we can easily close in a range of 3.5 to 3.75 this year,” he said.

Overall, the market believes the case for Fed action in September, and perhaps even in November, is receding.

Note: bond prices rise when yields fall.

 

In other markets …

Gold jumped by 0.4% overnight to US$1,944.87 an ounce.

Gold is trading near three-week highs now as concerns over further US interest rate hikes have eased.

Oil prices also lifted around +0.6%, with WTI trading now at US$81.65 a barrel.

Iron Ore 62% fe climbed +0.3% at US$108.99/tonne.

The Aussie dollar was flat at US64.75c.

Bitcoin meanwhile tumbled over 1% the last 24 hours to US$27,268.

 

5 ASX small caps to watch today

Cooper Metals (ASX:CPM)
Cooper provided an update on its diamond drilling campaign at King Solomon 1 Cu-Au prospect. Semi-massive sulphides intersected in 23MEDH002 have confirmed strongly mineralised breccia zone in the central plunging Cu-Au shoot. Drilling is expected to take another week, followed by a DHEM survey, geological interpretation and assays.

Hazer Group (ASX:HZR)
Hazer provided an update on the company’s Commercial Demonstration Plant (CDP). Hazer confirmed that the CDP remains on schedule to commence Phase 2 of its operation (hot operations), and to produce hydrogen and graphitic carbon in 2023. The heat exchanger (800HT) has been successfully installed at CDP, and the hot reactor (MKI) fabrication is nearing completion.

De.mem (ASX:DEM)
The water tech company reported record H1 revenues of $10.7m, 16% above the pcp. Gross margin increased further to 37% in H1, vs 25% in CY 2018. Key contract awards and orders received are supporting the case for a strong outlook in the second half, says DeMem.

Develop Global (ASX:DVP)
DVP says the discovery of extensive high-grade mineralisation sets up Woodlawn for significant resource growth. Multiple new lenses have beeb identified, while infill and extensional drilling hits up to 42.9% ZnEq. An updated mine plan is due this quarter, and a resource update is set for December quarter release.

Swoop Holdings (ASX:SWP)
The telco provider reported full year revenue of $78.2m, up 51% on pcp. Underlying EBITDA was $16.3m, up 25% on FY22. Swoop exited Q4 FY23 in a $0.5m positive free cash flow (FCF) position. The company spent the majority of its FY23 capex budget on customer growth, as well as building customer and network systems.

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