ASX to bounce back after a tech rally in New York
Lyft jumps 35pc despite hiccup in earnings release
Magnificent Seven over, now time for Sensational Six?
The ASX is poised to bounce back on Thursday after a tech rally on Wall Street. At 8am AEDT, the ASX 200 index futures contract was pointing down by +0.5%.
Overnight, the S&P 500 rose by +0.96%. The blue chips Dow Jones index was up by +0.4%, and the tech-heavy Nasdaq climbed by +1.3%.
Six of the Magnificent Seven stocks closed higher, with Apple the only one falling, by -0.5%,
The dip buying also sent bonds higher following yesterday’s selloff triggered by an unexpected jump in US CPI.
“The economy remains strong and isn’t in need of lower interest rates, which is ultimately supportive of stock prices,” Jeremy Straub at Coastal Wealth told Bloomberg.
Ride-sharing stock Lyft jumped +35% after earnings per share for the quarter came in at US18c per share, versus the US8c expected by analysts. However there was a bit of drama after Lyft mistakenly said in the company release that margins would expand by 500 basis points, or 5%, year over year in 2024, instead of 0.5%.
Tesla rose by +2.55% despite an informal poll of the company’s institutional investors showed that most expect the stock to underperform over the next six months.
Salesforce jumped almost +3% after the company launched Slack AI, a bot designed to make it easier to catch up on work threads and Slack channels.
Meanwhile, over the Atlantic, UK inflation unexpectedly held steady at 4% in January, compared to the expectations of 4.2%.
“We slightly overshot last month and slightly undershot this month,” said Bank of England boss Andrew Bailey, adding that the results “pretty much leaves us where we were.”
Sensational Six now?
Experts have observed that while the S&P 500 is a collection of 500 companies, it’s really just the seven huge tech stocks — the so-called “Magnificent Seven” — driving all the gains.
These seven companies make up almost a third of the index.
But could the Magnificent Seven evolve now into the Sensational Six? Some are calling for Tesla to get the chop from the coveted club.
After doubling in 2023, Tesla’s stock price is down -24% in 2024.
But what really makes Tesla different from the other six is, the other six are genuine benefactors of the burgeoning artificial intelligence (AI) technology, despite Musk’s efforts to position Tesla as an AI stock.
“Although Elon Musk would probably disagree, investors don’t see Tesla as an AI play like most of the other Magnificent Seven stocks,” Matthew Maley at Miller Tabak + Co, told Bloomberg.
In addition, Tesla may not be able to keep pace with the other six due to the dimming outlook for electric vehicles, where demand is expected to slow in 2024, and perhaps beyond.
In other markets …
Gold price fell by -0.1% to US$1,991.13 an ounce.
Oil prices were down around -1.6%, with Brent now trading at US$81.44 a barrel. This is despite news that Israel has pulled out of the peace talks with Hamas in Cairo.
The benchmark 10-year US Treasury yield slipped by 5 basis points to 4.26%.
Iron ore futures lifted slightly by +0.2% US$128.80 a tonne.
The Aussie dollar jumped by +0.5% to US64.92c.
Meanwhile, Bitcoin rose by +3.5% in the last 24 hours to US$51,585.
BTC has hit the US$1 trillion market cap once again, and some traders are targeting the US$64k level in the coming weeks amid more demand for spot Bitcoin ETFs.
5 ASX small caps to watch today
Imugene (ASX:IMU)
Imugene has dosed the first patient in the intravenous monotherapy arm of its Phase 1 clinical trial studying drug candidate onCARlytics (on-CAR-19, CF33-CD19 HOV4). The clinical trial is targeting adult patients with advanced or metastatic solid tumours, and is being held at City of Hope in California, with plans to open more sites in the US. The trial is expected to recruit 52 patients.
Gold Mountain (ASX:GMN)
GMN has commenced work on its clay-hosted Rare Earth Element tenements, along strike from (ASX:BRE) and (ASX:AUZ), that are located in the prospective Jequie region in Brazil. GMN now has amassed a land position over 970km2, including 51 granted tenements and 11 applications in the area.
Civmec (ASX:CVL)
The engineering company reported revenue of $492.3 million for the half-year, an increase of 17.5% on the pcp. EBITDA was $59.6 million, representing a 12.6% increase on the pcp. Interim dividend was declared at 2.5c for H1, increased by 0.5 cents from the pcp.
Hotel Property Investments (ASX:HPI)
Rental income for the half was up 3.4% on pcp to $36.5 million, due to contract rent increases across HPI’s pub portfolio. Adjusted Funds From Operations (AFFO) decreased by 2.1% to $18.5 million, primarily due to the impact of increased variable interest costs. The half-year distribution for 31 December was 9.5 cents, versus 9.2 cents in the pcp.
S2 Resources (ASX:S2R)
Further assay results have been received from initial diamond drillholes at Goornong prospect with high grade gold in SFVD0005. Numerous intercepts in SFVD0005 include: 5.0m at 3.5g/t gold, 3.0m at 9.2g/t gold, and 10.2m at 4.2g/t gold.
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