Market Highlights: S&P 500 climbs to record high, Big 4 banks’ earnings prediction, and 5 ASX small caps to watch

ASX to climb after S&P 500 hit record high
Tesla and IBM are set to release their earnings this week
And what Aussie big four banks will report this earnings season

Aussie shares are poised to open higher on Monday after a big rally in New York. At 8am AEDT, the ASX 200 index futures contract was pointing up by 0.4%.

On Friday, the S&P 500 surged by +1.23% to a record high. The blue chips Dow Jones index was up by +1.05%, and the tech-heavy Nasdaq rocketed higher by +1.70%.

Wall Street traders were in a bullish mood as bets on a US soft economic landing increased, despite the probability of a 25 basis-point rate cut in March declining to 48% from 77% a week ago.

“Much more good than bad news in the underlying economic data as we enter 2024, with inflation cooling,” said Art Hogan at B Riley Wealth.

San Francisco Fed Reserve Bank President Mary Daly however struck a more bearish tone, telling a FOX interviewer on Friday that it was “premature” to think interest-rate cuts are around the corner.

“Do I get consistent evidence that inflation is coming down, or do I get any early signs with the labor market starting to falter?” Daly said. “Neither one of those right now is pushing me to think that an adjustment is necessary.”

To stock news, Boeing rose 1.6% after a purchase order for 150 Max jets from India’s newest airline, Akasa Air.

Apple rose 1.55% after vowing to open up its tap-to-pay technology on iPhones to rivals, in a bid to avoid EU antitrust fines.

Ford Motor rose 2% as it cut production of its F-150 Lightning electric truck as demand for electric vehicles declined.

On the docket this week for earnings release are Tesla and IBM, while crucial economic reports to be released include US GDP and US Core PCE Price Index.

Read: Traders’ Diary: Everything you need to know before the ASX opens

What Aussie banks will report this earnings season

Back home in Australia, earnings season is also around the corner. The Big Four banks – a bellwether for national economic conditions – will be reporting their results.

Morningstar analyst Nathan Zaia believes that bank margins are falling, but earnings are still solid.

“Net interest margins are likely peaked in first-half fiscal 2023, and are expected to fall in fiscal 2024,” Zaia said.

“Net interest income makes up 80% to 85% of revenue. While bad debts are likely to rise, we anticipate cost containment to allow cash profits to grow broadly with revenue.

“Our expectation of low credit growth is consistent with RBA forecasts for gross domestic product growth to average around 1.9% in fiscal 2024 and 2025. Rising house prices and drawdowns of savings add to total credit growth.

“Turnaround stories Westpac (ASX:WBC) and ANZ Group (ASX:ANZ) are our top picks, MyState (ASX:MYS) is cheap as market overstates margin downside,” said Zain.

In other markets …

Gold price rose by another +0.35% to US$2,029.48 an ounce.

Oil prices tumbled by around half per cent, with Brent now trading at US$78.80 a barrel.

The benchmark 10-year US Treasury yield fell 1.5 basis points (bond prices higher) to 4.13%.

Iron ore futures were higher by +0.2% to US$129.65 a tonne.

The Aussie dollar surged by +0.25% to US65.89c.

Meanwhile, Bitcoin was down -0.2% in the last 24 hours to US$41,675.

5 ASX small caps to watch today

Zip Co (ASX:ZIP)
Zip has announced its Q2 results for FY24. Transaction volume for the quarter was $2.8b (up 8.5% vs pcp). Quarterly revenue was $225.6m (up 26.1% vs pcp), and Group cash EBTDA for 1H24 is expected to be between $29.0m and $33.0m. Revenue margin has improved to 8.2% (vs 7.1% in pcp). Active customer numbers at the quarter end were 6.3m (vs 6.1m in Q1 FY24).

Southern Cross Gold (ASX:SXG)
SXG has provided a geological update for its 100%-owned Sunday Creek Gold Project located in the central Victorian goldfields. A total of 42 mineralised vein set shapes have been created for Sunday Creek. The mineralised vein sets are typically between 5-30m wide, 20-100m in strike, and currently defined vertically down to 1km depth and up to 570m in depth extent on an individual vein set basis.

Hamelin Gold (ASX:HMG)
Infill aircore drilling at Fremlins South has confirmed coherent regolith gold anomaly, which appears to be open and improving to the south. Intersections include: 22 metres at 0.34g/t Au from 22 metres, including 2 metres at 1.2g/t Au from 18 metres, and 2 metres at 1.06g/t Au from 54 metres. Follow-up RC drilling and further aircore drilling are planned at Fremlins South, Olsen and Newkirk in the 2024 field season.

Delorean Corporation (ASX:DEL)
The Yarra Valley Water’s $53m food waste to energy project has achieved a significant milestone, and is now transitioning to the construction phase following the receipt of all necessary regulatory approvals. Delorean was awarded the contract for the delivery of the bioenergy facility, including the design and construction of the facility with a two-year operation and maintenance contract valued at $6.5m.

Future Battery Minerals (ASX:FBM)
Assay results returned from Phase 3 diamond (DD) drilling at the Nevada Lithium Project (NLP) have confirmed a significant extension to the depth of high-grade mineralisation (up to a further 37 metres downhole). Significant intercepts returned from the Phase 3 DD include: 226m @ 855ppm Li from 140m, and 148m @ 795ppm Li from 152m.

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

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