Market Highlights: Bonds, gold, oil all spike higher; and 5 ASX small caps to watch today

Shares to rise as investors digested US GDP and PCE data
Dovish comments from Fed officials push yields lower (prices higher)
But as global bonds soar, an expert says we need to do this to our portfolio

Aussie shares are poised to edge higher again on Thursday after a mixed session on Wall Street overnight. At 8am AEDT, the ASX 200 index futures was pointing up by +0.2%.

In New York, the S&P 500 fell by -0.1%, the blue chips Dow Jones index was up by +0.04%, and the tech-heavy Nasdaq slipped by -0.16%.

Investors digested crucial reports last night, including the latest US GDP release which shows the US economy grew sharply at a 5.2% annualised pace in Q3, more than the 4.9% estimated.

The quarterly reading for Personal Consumption Expenditures (PCE) also showed core prices (which exclude volatile categories like food and energy) grew at a 2.3% pace in Q3, vs estimate of 2.4%.

To stock news, General Motors rose almost 10% after saying that it will boost its dividend by 33% and repurchase US$10 billion of shares – its biggest-ever buyback. The GM share price had slumped by more than 30% in the last 12 months prior to the announcement.

Shoes retailer Foot Locker was amongst the best movers, up 16% after beating third-quarter earnings and sales expectations.

Cyber security stock Crowdstrike Holdings jumped 10%, also after reporting Q3 earnings that beat expectations.

Oil prices meanwhile lifted by another 1.5% as anxieties surrounding the high-stakes OPEC+ meeting later today grow. OPEC+ will convene to decide next steps in its production policy, and traders are expecting further supply cuts.

What you should do as bond prices spike

The US bond yields fell further (bond prices higher) after Fed Bank of Cleveland president Loretta Mester said last night that an easing of inflation has allowed the Fed to be “nimble”.

Mester added that she would support continuing to hold rates steady at the December meeting.

The benchmark 10-year US Treasury yield fell 7 basis points to 4.26% after her comments, and is now down 57 basis points in the past month.

Bill Ackman is among those influential investors now betting the Fed will start cutting rates as soon as the first quarter of 2024.

But as global bonds soar at the quickest pace since the 2008 financial crisis, investors need to review their investment portfolios to ensure they are on track for risk tolerance and return objectives.

That’s the call-to-action warning from de Vere’s Nigel Green, who said the soaring bond market presents both challenges and opportunities.

“Those with significant allocations to fixed-income securities are reaping the benefits of capital appreciation as bond prices rise inversely to yields,” Green said.

“However, the flip side is the potential for diminishing future returns as yields trend lower. Investors must carefully reassess their fixed-income portfolios to ensure they align with their risk tolerance and return objectives in this shifting environment.”

The bond market rally also has implications for equity markets and overall risk appetite, says Green.

“As interest rates stabilise or decline, the appeal of higher-yielding assets, such as dividend-paying stocks, will rise. Conversely, sectors that traditionally perform well in a rising rate environment, such as financials, could face headwinds.”

With traditional safe-haven assets offering lower returns, “there’s legitimate reason to explore riskier investments in pursuit of higher yields,” Green added.

In other markets …

Gold price keeps climbing, up another 0.15% to US$2,044.12 an ounce.

Bullion has been rising on the back of a weaker US dollar, and the current rally has boosted hopes that it could top its all-time high of US$2,074.88 reached in August 2020.

Oil prices lifted +1.6%, with Brent now trading at US$82.99 a barrel, ahead of the OPEC+ meeting later today.

Iron ore futures traded sideways to US$130.38 a tonne.

The Aussie dollar gave up some of this week’s gains, down by -0.45% to US66.18c.

Meanwhile, Bitcoin was down -0.87% in the last 24 hours to US$37,743.

5 ASX small caps to watch today

GenusPlus Group (ASX:GNP)
GenusPlus and Samsung C&T joint venture has been awarded the Melbourne Renewable Energy Hub (MREH) Project. The joint venture comprises Genus 30% and Samsung C&T 70%. The contract for MREH engineering, procurement, construction, and commissioning for BOP (balance of plant) scope and BESS (battery energy storage system) installation works is valued at approximately $200 million. The MREH Project will be a 600MW/1600MWh BESS.

AIC Mines (ASX:A1M)
AIC Mines announced outstanding drilling results from the Jumbuck, Squatter and Billabong shoots at the Jericho Copper Project. Resource extension drilling has extended the high-grade Jumbuck shoot down plunge. Better results include: JEDD034 – 7.4m (4.8m ETW) grading 3.30% Cu from 487.85m. Resource definition drilling has returned higher grades than expected from the Billabong shoot: JERC034 – 3.0m (2.4m ETW) grading 2.30% Cu from 148m.

Helix Resources (ASX:HLX)
New copper mineralisation has been observed in seven reverse-circulation (RC) drill holes at the Bijoux copper prospect. Sulphide copper (chalcopyrite) mineralisation was intersected for the first time by following up on oxide intercepts. Copper mineralisation has been logged along a 140m north-northwest (NNW) trending zone in the core of a 1.6km long copper soil anomaly. The oxide copper is shallow, and may have economic potential in its own right subject to further work.

Battery Age Minerals (ASX:BM8)
BM8 reported a strong start to Phase II drilling, with additional thick zones of spodumenebearing pegmatites intersected, highlighting potential for scale. Spodumene-bearing pegmatite were intersected in all 15 holes completed. Multiple new intercepts over 20m down-hole at Falcon East Extension, highlighting the potential scale of the mineralised system. Assay results are being expedited for priority holes with results expected in the next few weeks.

Lightning Minerals (ASX:L1M)
Lightning Minerals has confirmed a lithium in-soil anomaly over a 2.6km by 1km area where assays have returned values more than 100ppm lithium. The infill soil sampling has returned assays up to 177ppm lithium, following the first pass soil sampling which returned assays up to 218ppm lithium . All soil sampling is now complete on tenements E63/2000 and E63/1993 with plans now underway to begin drilling in early 2024.

At Stockhead we tell it like it is. While Battery Age Minerals is a Stockhead advertiser, it did not sponsor this article.

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