Market Highlights: ASX to slump at the open; oil jumps 3pc and gold breaches US$2k as war escalates

ASX to fall 1pc at the open as war in Middle East escalated
Oil stocks climbed 3%, while gold is trading over the US$2k mark
Goldman Sachs says buy if stock fall further

Aussie shares are poised to fall heavily at the open as war in the Middle East escalated over the weekend. At 8am AEST, the ASX 200 index futures was pointing down by -1%.

In New York, the S&P 500 fell by -0.48%, the blue chips Dow Jones index was down by -1.16%, but the tech-heavy Nasdaq climbed by +0.38%.

Stocks mostly slumped as Israel deepened its war with Hamas and sent troops and tanks into the northern Gaza Strip.

Amazon rose 7% after reporting a 13% increase in net sales for Q3 of US$143.1 billion, on the back of strong cloud revenue.

Intel surged 9% as the chipmaker beat Q3 targets.

Ford sank 12% after its earnings underlined concerns about costs and EV plans.

Oil stocks also slumped. Chevron was down -6% following lower Q3 profit, and Exxon fell -2% after it posted a 54% year-on-year profit drop.

Oil prices meanwhile climbed nearly 3% on Friday on worries that a wider conflict with Palestine and Iran could disrupt global crude supplies.

Buy if stocks fall further, says Goldman

As markets become more optimistic about the outlook for US economic growth, Goldman Sachs believes it may offer a chance to buy stocks.

Goldman strategists led by David Kostin said the firm’s view is that the US economy will remain relatively resilient, and companies in sectors like financial services, semiconductors and materials could fare relatively well.

Kostin had warned earlier in the month that higher rates might be affecting US profits, but he still sees the S&P 500 ending the year at 4,500 (versus 4.117 at present).

Kostin also says that the Russell 2000 (which is the benchmark US small caps index) is particularly sensitive to the growth outlook, while Nasdaq-100 is more vulnerable to discount rate risk, but has less leverage (debt).

“Valuations and leverage have captured investor attention since August, but focus has recently shifted to the growth outlook,” said Kostin in the note.

“We expect headwinds to valuations and balance sheets to persist, but would view a substantial further downgrade to the growth outlook as a buying opportunity.”

In other markets …

Gold price jumped 1% to over the psychological US$2k level of US$2,006.18 an ounce.

Bullion has now jumped 9% since Hamas attacked Israel on October 7, bouncing back from a seven-month low as demand for safe haven increases.

Oil prices climbed almost +3%, with Brent trading now at US$90.26 a barrel.

2-year US bond yield jumped 2% to 5.01%.

Iron ore futures was up 0.1% at US$118. 55 tonne.

Base metals prices were mixed, with 3-month nickel futures falling by -1.3%, and copper futures down -0.6%.

The Aussie dollar gained +0.25% to US63.35.

Meanwhile, Bitcoin was down -0.5% in the last 24 hours to US$34,085.

5 ASX small caps to watch today

Findi (ASX:FND)
Digital payment and financial services provider, Findi, has secured a 10-year contract with State Bank of India (SBI) that will generate revenue of up to $620 million, whereby the company will provide 4,219 ATMs in India. The term is for seven years with a three-year extension, and will deliver between $550 million and $620 million in revenue, and between $250 million and $280 million in EBITDA over the extended contract period of 10 years.

Calix (ASX:CXL)
Calix announced that Leilac, its 93% owned subsidiary, has signed a binding and perpetual global licence agreement and a collaboration agreement with Heirloom, a direct air capture (DAC) company. Under the terms, Leilac will receive a royalty based on the value of the CO2 captured with the technology. The royalty will have a floor price set at the greater of US$3/tonne of CO2 separated in a Leilac kiln, or 3.5% of the prevailing CO2 price for lime decarbonisation.

Adore Beauty (ASX:ABY)
Adore reported a trading update for the last quarter. Revenue was $47.5 million, up 4.7% on the pcp. Active customer numbers returned to growth, up 1.5% on pcp to 803k. Record 497k returning customers, up 4.7% on pcp. The company says it’s on track to achieve EBITDA margin of 2-4% in FY24.

Hazer Group (ASX:HZR)
Hazer and Japan giant Mitsui have agreed to advance the collaboration for graphite marketing following positive market feedback. Under the original MOU, Hazer and Mitsui agreed to conduct an initial marketing survey of applications for Hazer’s low emissions graphite in the steel making and chemicals industries, utilising Mitsui’s global network. Following detailed evaluation and testing, the parties have received positive market feedback and successfully identified several potential customers showing initial interest in Hazer graphite.

NickelSearch (ASX:NIS)
NickelSearch has commenced a programme of work to test the lithium prospectivity of the broader Carlingup tenement package. Independent review of geochemistry identified numerous areas of interest for Lithium-Caesium-Tantalum (LCT) pegmatites. Interpretation of geophysical and geological information has led to further areas of interest being identified, with 28 areas of interest for LCT pegmatites now identified. NickelSearch is also collaborating with Allkem (ASX:AKE) to advance lithium exploration on its Carlingup tenements.

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

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