Market Highlights: ASX to surge today after Wall Street’s CPI-fuelled rally, and 5 small caps to watch

ASX to open much higher after a CPI-driven rally on Wall Street
Nvidia, Snap Inc, Tesla rose
Bitcoin meanwhile has slipped by more than 3pc

 

Aussie shares are poised to open much higher on Wednesday on the back of a soft US CPI overnight. At 8am AEDT, the ASX 200 index futures was pointing up by +1.3%.

In New York, the S&P 500 surged by +1.91%, the blue chips Dow Jones index was up by +1.43%, and the tech-heavy Nasdaq rose by +2.37%.

Stocks rallied after the US inflation increased by 3.2% year-on-year in October, down from the 3.7% figure in September. The figure however was flat month on month.

Prices that fell included airfares, which dropped 13.2% drop YoY, along with rental and used cars.

“The surprisingly cool CPI solidifies our expectations that the Fed Reserve is done with hiking rates this year and will hold them steady in December,” said de Vere’s Nigel Green.

ANZ Research wrote “The probability of a US rate hike in December and January is now zero, and the first rate cut is priced for May as opposed to July yesterday.”

Bond yields collapsed after the report, with the benchmark US 10-year treasury yield crashing by -18bp (bond prices higher).

To stocks, Nvidia rose 2% and is on track to hit a new high after releasing the new H200 AI chip.

Tesla climbed more than 6% after announcing that it will hike prices in China.

Snap Inc rose 7% after reaching a deal with Amazon to let people buy Amazon products directly from ads on the Snapchat app.

Luxury hybrid electric vehicle maker, Fisker, was the biggest mover, down -19% after weaker than expected Q3 numbers.

Back home, Australia’s Q3 wage price index data will be released this morning.

 

Aussie banks still resilient despite headwinds

Last week, all big four Aussie banks posted strong full-year earnings.

Despite highly competitive pricing and RBA rate rises, the banks’ net interest margin (NIM) flowed through to higher revenues.

A report by EY has concluded that Aussie banks remain unquestionably strong.

“But economic headwinds mean banks, like consumers, face some challenging times ahead,” said the report from EY.

“With mortgage profitability continuing to tighten, the banking sector is hunting for growth outside retail lending, such as business lending, and looking to optimise funding and operational costs.”

EY also noted that the full impact of rate increases is still to play out.

“Accumulated household savings are helping to cushion the impact of high rates, but the effect is wildly uneven. People in their early 30s are reported to be feeling the cost-of-living squeeze particularly acutely.”

Other areas of exposure for banks include the troubled construction sector and retail trade, said EY.

 

In other markets …

Gold price rose +0.85% to US$1,962.63 an ounce.

The benchmark US 10-year treasury yield was down 18bp to 4.45%.

Oil prices were flat, with Brent trading at US$82.46 a barrel.

Iron ore futures was up 0.35% to US$128.78 a tonne.

The Aussie dollar surged by 2% to US65.08c after the US CPI report.

Meanwhile, Bitcoin slipped -3.5% in the last 24 hours to US$35,400.

 

5 ASX small caps to watch today

SRG Global (ASX:SRG)
SRG Global has secured $200m of contracts across a diverse range of sectors in Australia and New Zealand. Term contracts have been secured in the energy, defence, water and mining sectors. Specialist services contracts meanwhile have been secured with repeat clients in the transport, water, mining, ports and building sectors.

MMA Offshore (ASX:MRM)
MMA announced that EBITDA for the first half of the financial year is expected to be in the range of $55-60 million. The business has had a strong start to the financial year with vessels, subsea and project logistics divisions all delivering higher than expected earnings for the first four months, together with a solid contracted revenue position for the remainder of the first half.

Hot Chili (ASX:HCH)
HCH has entered into an Option Agreements to acquire 100% interest in two historical copper mine areas; Marsellesa and Cordillera, located near Hot Chili’s Costa Fuego Copper Gold Project in the coastal range of the Atacama Region, Chile. Both mine areas have been privately held and historically exploited for shallow copper oxide and copper sulphide material, but have never previously been drill tested.

Thor Energy (ASX:THR)
Thor announced significant uranium drill intercepts at its 100% owned Wedding Bell and Radium Mountain projects in southwest Colorado. Significant results above 500ppm include: 0.5m @ 3186ppm (0.319 %) eU3O8 from 76.2m, and 0.6m @ 1710ppm (0.171%) eU3O8 from 63.1m.

Tennant Minerals (ASX:TMS)
Significant copper mineralisation has been intersected at Bluebird East, a potential repeat of the high-grade Bluebird copper-gold discovery, with more drilling to come. Drilling has intersected 63m of hematite alteration with 48m of strong to intense copper mineralisation in BBDD0045, including zones of massive chalcopyrite.

At Stockhead we tell it like it is. While Hot Chili is a Stockhead advertiser, it did not sponsor this article.

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