ASX to open much lower after a higher than expected US CPI print
Shopify Inc plunges 13pc despite profit beat
SEC chairman warns of “AI greenwashing”
The ASX is poised to open much lower on Wednesday after the US January CPI unexpectedly rose at a faster rate than forecast. At 8am AEDT, the ASX 200 index futures contract was pointing down by -1.5%.
Overnight, the S&P 500 fell by -1.44%. The blue chips Dow Jones index was down by -1.39%, and the tech-heavy Nasdaq slipped by -1.86%.
Traders were unsettled after the US CPI print came in at 3.1%, the highest reading in 8 months, potentially crushing hopes of a near term Fed rate cut.
“The Fed will view this as another reason to wait until May or June, but the direction of trend is still lower,” said Charles Schwab’s chief fixed-income strategist, Kathy Jones.
To stocks, Shopify Inc plunged by -13% after Q4 sales and profit only narrowly beat estimates.
Pharma company Biogen fell -7% after Q4 revenue missed analysts’ expectations on declining multiple sclerosis drugs sales.
Boeing Co. fell -2% after announcing plans to build the 737 Max aircraft at a slower pace during H1 amid quality issues.
Investors should be careful of “AI greenwashing”
Meanwhile, SEC chair Gary Gensler said overnight that companies must be clear when they mention the words “artificial intelligence (AI) “to investors, in order to avoid “AI washing”.
Gensler said companies must clarify to investors what they mean, how they’re intending to use AI, and decide if they should be using the term at all in the first place.
“As AI disclosures by SEC registrants increase, the basics of good securities lawyering still apply,” Gensler said in a speech at Yale Law School.
His comments came after more than 40% of S&P 500 companies used the term AI in their annual reports to the SEC, according to Bloomberg data.
Gensler acknowledged that AI is the “transformative technology of this generation,” but has warned companies not to mislead investors.
“Claims about prospects should have a reasonable basis, and investors should be told the basis.”
“Investment advisers or broker-dealers also should not mislead the public by saying they are using an AI model when they are not, nor say they that an AI model does something it’s not doing,” Gensler said.
In other markets …
Gold price fell by -1.3% to US$1,993.19 an ounce.
Oil prices were up around +1%, with Brent now trading at US$82.52 a barrel.
The benchmark 10-year US Treasury yield surged by 15 basis points on the high CPI print (bond prices lower) to 4.32%.
Iron ore futures was flat at US$128.05 a tonne.
The Aussie dollar tumbled by -1.2% to US64.52c after the US dollar surged after CPI announcement.
Meanwhile, Bitcoin fell by -1% in the last 24 hours to US$49,600.
5 ASX small caps to watch today
Tower (ASX:TWR)
The Kiwi insurer said full year underlying NPAT is expected to be at the upper end of or exceed the previously advised range of between $22m and $27m. The increased NPAT guidance follows strong trading results for the first four months of this financial year. Accordingly, Tower said it expects it will be at the top end or exceed its gross written premium (GWP) and combined operating ratio (COR) guidance ranges over the FY24 year.
Nickelx (ASX:NKL)
NKL has secured 100% of the rights to 4 highly prospective uranium targets in Ontario, Canada, via low-cost staking (100% ownership). The Elliot Lake Uranium Project is in south-central Ontario and covers 30 multi-cell mining claims covering 129 km2 in the prolific Elliot Lake Uranium district, along strike from historic major uranium producing mines.
DevEx Resources (ASX:DEV)
DEV says that recent air-core drilling at the company’s 100%-owned Kennedy Ionic Clay-Hosted REE Project in North Queensland has further significantly expanded the footprint of total rare earth oxide (TREO) mineralisation in surface clays. Higher grade intervals include: 3m @ 1,370ppm TREO from surface, and 4m @ 1,056ppm TRE from surface.
Beamtree (ASX:BMT)
The digital health tech company reported that group revenue for H1 was 23% higher than the pcp at $12.95m. Beamtree reported EBITDA loss for the first half of $0.8m, versus pcp loss of $2.1m. Beamtree reaffirms outlook, and says revenue growth in FY24 is expected to exceed 20%. The company also expects to deliver positive operating profit in FY24.
Traffic Technologies (ASX:TTI)
TTI announced the awarding of a number of significant new contracts in Australia and internationally with a combined value of approximately $4m. TTI says the awarding of these new contracts is a testament to the company’s longstanding capabilities in designing and providing major cities with smart and environmentally sound technology for major infrastructure works on a global scale.
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