ASX 200 set to open higher on Thursday
Wall Street reaches new highs post US inflation data
Fed Reserve holds rates, hints at one rate cut in 2024
The ASX 200 is poised to track Wall Street higher when the market opens on Thursday. At 8am AEST, the ASX 200 futures contract was pointing up by +0.5%.
Overnight, Wall Street reset its record highs once again after the much anticipated US inflation data was released.
The core CPI (which doesn’t include food and energy prices) slowed down in May for the second month in a row, up by just 0.2% from April. Compared to the same time last year, it increased by 3.4%, the slowest annual pace in over three years.
Following the CPI report, the Fed Reserve maintained its interest rates as anticipated, but indicated it now expects to cut rates only once in 2024, rather than the three times previously projected.
Fed Chair Jerome Powell reiterated during the post-meeting press conference that the central bank will not lower rates until further data confirms that inflation is really cooling.
“We see gradual cooling, gradual moving toward a better balance,” he said. “We’re monitoring it carefully for signs of something more than that, but we really don’t see that,” Powell said.
Treasury bonds rallied across the curve after Powell’s comments, pushing yields on both two-year and 10-year bonds to drop by about 7 basis points.
The stock market also rallied. The S&P 500 rose by +0.85% to another all-time high, the blue chips Dow Jones index was down by -0.09%, and the tech-heavy Nasdaq lifted by +1.33%.
Broadcom Inc, a chip supplier for Apple, rose by +2% after the company reported better-than-expected results and an optimistic annual forecast, driven by strong demand for AI products.
Virgin Galactic dropped -5% after the company announced a 1-for-20 reverse stock split to keep the stock listed on the New York Stock Exchange.
FedEx Corp fell -1.5% after revealing plans to reduce up to 2,000 jobs in Europe as part of its ongoing efforts to streamline its global workforce and manage costs more effectively.
And Boeing fell a further -1.5% after saying that it received orders for just four new planes in May, and for the second month in a row, none of them were for its popular 737 Max. The result was far behind rival Airbus, which secured net orders for 15 planes in May.
Most Financially Healthy Countries in 2024
A recent study by Banking Methods analysed various data to determine the most financially healthy countries, focusing on key metrics such as GDP per capita, debt per capita, and average yearly salary.
Firstly, the countries with the highest GDP were determined.
The debt per capita and average yearly salary were then determined to calculate the time required for citizens to cover the national debt, ranking the countries accordingly.
Source: Banking Methods. Data in US$
San Marino leads in financial health, able to pay off its national debt in just 2.7 months, with the lowest debt per person at $10,604 and a high average salary of $47,120.
Israel follows closely, covering its debt in about 3.5 months, with a debt per person of $16,019 and an average salary of $55,140.
Qatar completes the list, where residents take about a year to cover the national debt.
In other markets …
Gold price climbed by +0.3% to US$2,323 an ounce.
Oil prices lifted by +0.5%, with Brent crude now trading at US$82.48 a barrel.
Crude’s jump over the last few days has been fuelled by optimism surrounding a potential uptick in fuel demand during the northern hemisphere’s summer months.
The benchmark 10-year US Treasury yield fell by 7 basis point (bond prices higher) to 4.32%.
The Aussie dollar was up by +0.8% to 66.64 cents.
The iron ore price fell by -1% to US$103 a tonne.
Bitcoin meanwhile lifted by +1.3% in the last 24 hours to US$68,273, while Ethereum was also up around +1.8% to US$3,562.
5 ASX small caps to watch today
Lithium Australia (ASX:LIT)
Lithium Australia has signed a new three-year Mixed Metal Dust (MMD) off-take agreement with SungEel HiTech, a leading South Korean battery recycler.Under the off-take agreement, SungEel HiTech will purchase a minimum of 60% of Lithium Australia’s annual MMD production, subject to quality requirements being met.
Magnetic Resources (ASX:MAU)
Recent deep drillings have revealed that the northern part of the 750m LJN4 deposit extends southeast and is larger than initially thought. This zone, known for strong silica and green fuchsite, is bigger than the southern zone with silica, pyrite, and breccia. It stretches at least 600m southeast, reaches a depth of 650m, and spans up to 200m in length. Ongoing drilling aims to explore further extensions down dip by 150m and 100m respectively in holes MLJDD054 and MLJDD055. Since May 10, this zone has expanded by 300m.
MMA Offshore (ASX:MMA)
MMA reported improved earnings and performance in the second half of FY2024. The company said it has successfully negotiated favourable project outcomes, including recovering costs and completing a major subsea project ahead of schedule and under budget. Accordingly, MMA provides the following updated earnings guidance for FY24: Underlying EBITDA is expected to be in the range of $146 – 149 million. And Underlying EBIT is expected to be in the range of $96 – 99 million.
Carnavale Resources (ASX:CAV)
Carnavale announced promising results from its Maiden Mineral Resource Estimate (MRE) and Scoping Study for the Swiftsure deposit within the Kookynie Gold Project in Western Australia. Initial findings show 457,000 tonnes of ore averaging 5.8 grams per tonne, containing approximately 85,000 ounces of gold. Notably, a high-grade zone called the “ounce dirt” holds about 53,000 ounces at an impressive grade of 31.2 grams per tonne of gold.
Pioneer Lithium (ASX: PLN)
Pioneer has begun summer field work at the Root Lake Lithium Project in Ontario, Canada. The company’s geological team is conducting targeted mechanical stripping and trenching to uncover rock outcrops at three promising locations on the property. This effort aims to gather vital geological data to plan their upcoming maiden drill program. Pioneer will focus on expanding known lithium-rich pegmatite fields near the property borders, including potential extensions of significant resources at Consolidated McCombe and Root Bay pegmatite fields.
At Stockhead we tell it like it is. While Magnetic Resources and MMA Offshore are Stockhead advertisers, they did not sponsor this article.
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