Market Highlights: Europe stocks tumble on ECB comments, Davos kicks off, and 5 small caps to watch

ASX to open lower, tracking movements in Europe
Germany GDP contracted by 0.3pc in 2023
CEOs are optimistic about future as Davos event kicks off

 

Aussie shares are poised to edge lower on Tuesday, tracking equity markets in Europe. At 8am AEDT, the ASX 200 index futures contract was pointing down by -0.3%.

Wall Street was closed for Martin Luther King Day, but stock market indexes in Europe mostly fell, with the benchmark STOXX 600 down by -0.54%.

European traders reacted negatively to the GDP report out of Germany, which showed that the German economy contracted by 0.3% in 2023.

Comments from Robert Holzmann, a member of the European Central Bank’s Governing Council, didn’t help when he said the ECB may defy market expectations and hold off on rate cuts for the whole of this year.

“I cannot imagine that we’ll talk about cuts yet, because we should not talk about it.

“Everything we have seen in recent weeks points in the opposite direction, so I may even foresee no cut at all this year,” Holzmann told CNBC at theWorld Economic Forum in Davos which kicked off last night.

The money market however is showing that traders are betting on six 25bp cuts from the ECB this year, starting in April.

Among the biggest stock movers last night was Dassault Aviation SA, which slumped -6.5% after the French aircraft maker reported a decrease in jet orders for the year 2023.

Delivery stocks Hero and Just Eat Takeaway.com dropped after BNP Paribas recommended investors steer clear of Europe’s food delivery sector.

“The sector is hard pressed to grow volumes, and it is hard to be enthusiastic about a sector in which HelloFresh, the only one making money, is also warning on profit,” says BNP.

 

CEOs are more optimistic as Davos kicks off

Ahead of the WEF event in Davos, the PwC’s 27th Annual Global CEO Survey shows that the proportion of CEOs who believe global economic growth will improve over the next 12 months has more than doubled year-on-year.

The survey, which interviewed 4,702 CEOs across 105 countries, found that 38% of CEOs are optimistic about global economic growth prospects over the next 12 months, up from 18% in 2023.

At the same time, the proportion of CEOs concerned about their long-term business viability has risen to 45%, as tech and climate pressures accelerate.

CEOs in most regions of the world are also more likely to be optimistic about domestic economic prospects than pessimistic.

However, CEOs in North America and Western Europe buck the trend – in Western Europe, 32% expect their domestic economies to improve, 48% decline; North America, 31% and 52%, respectively.

Meanwhile, employers in every region are more likely to increase than decrease headcount, with the Middle East the most bullish on hiring (65%).

 

In other markets …

Gold price keeps rising, and was up by +0.26% last night to US$2,054 an ounce as traders sought safe haven assets following escalation in the Middle East.

Oil prices fell by -0.25%, with Brent now trading at US$78.13 a barrel.

The benchmark 10-year US Treasury yield fell by 2.5 basis points (bond prices higher) to 3.5%.

Iron ore futures slumped by another -1.7% to US$127.50 a tonne, as Rio Tinto prepares to release its latest quarterly production update at 8.30am AEDT.

The Aussie dollar fell by -0.40% to US6658c.

Meanwhile, Bitcoin was up +1% in the last 24 hours to US$42,748.

 

5 ASX small caps to watch today

HUB24 (ASX:HUB)
The wealth platform reported record net inflows of $4.5 billion for the December quarter, up 60.4% on pcp including $1.8 billion from a large client transition. Total Funds Under Administration (FUA) was $91.2 billion as at 31 December 2023, up 25% on pcp.

FireFly Metals (ASX:FFM)
FFM reported grades of up to 19% CuEq which extend known mineralisation by 350m at its Green Bay Copper-Gold Project, Canada. Significant results received include: 46.4m @ 4.6% Cu, 1.2g/t Au, 7.5g/t Ag (5.6% CuEq). FireFly says first drilling from the new underground platform is expected to start this month.

Metals Australia (ASX:MLS)
High-grade flake-graphite result of 64.3% graphitic carbon (Cg) has been received from the extensive sampling program at Lac Rainy – which also produced 10 results of over 20% Cg and averaged 11% Cg across a 36km strike-length of graphitic trends. Major drilling programs are now set to commence to test new high-grade zones and target a substantial Mineral Resource upgrade.

Emmerson Resources (ASX:ERM)
Grades of up to 43.2g/t gold have been intersected from the extensional drilling at Golden Forty. Results include: 20m @ 4.7g/t gold from 193m, including 6m @ 15.2g/t gold, and 18m @ 1.3g/t gold from 103m including 10m @ 2.1g/t gold. Drilling has extended the known mineralisation at depth below the historical high-grade mineralisation.

HeraMED (ASX:HMD)
The medical data company has entered into a strategic collaboration agreement with GPEx (SA), an organisation that delivers solutions for primary care, including education and training, GP shared care programs, workforce solutions and clinical trials. GPEx and HeraMED are undertaking a pilot to better understand how the HeraCARE platform can benefit pregnant mothers and the health industry, in regional and remote South Australia.

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