Nasdaq falls ahead of Nvidia’s earnings
US cybersecurity stocks plunge after Palo Alto miss
Rio Tinto’s full year profit tumbles by -12pc, and a quick review of its results
The ASX is poised to open lower on Thursday after a mixed session on Wall Street. At 8am AEDT, the ASX 200 index futures contract was pointing down by -0.3%.
Overnight, the S&P 500 fell by +0.13%. The blue chips Dow Jones index was down by -0.13%, and the tech-heavy Nasdaq tumbled by -0.32%.
JP Morgan analysts say there will be a correction on the S&P 500 going into March.
“An S&P 500 break below 4800 would dramatically increase our conviction in that view,” said the note from JP. The index closed at 4,981 last night.
Nvidia is set to report its Q4 earnings in the next hour so (post market in New York).
“The AI-driven rally in the ‘Mag Seven’ is largely justified by the fact that they’re making a lot more money than they were previously,” said Tom Essaye of The Sevens Report.
Cybersecurity stock Palo Alto Networks tumbled -28% after missing expectations for current year revenue guidance.
Other cybersecurity stocks, Crowdstrike and Zscaler, also sold off on the news.
Virtual healthcare stock, Teladoc Health, slumped -25% after earnings per share and revenue guidance also fell short of estimates.
Meanwhile, the Fed Reserve minutes for the January 30-31 meeting suggests that Fed officials were concerned about lowering rates too quickly.
“Most participants noted the risks of moving too quickly to ease the stance of policy, and emphasised the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2 per cent,” the minutes stated.
A review of Rio’s full year results
Rio Tinto (ASX:RIO) reported a 12% tumble in full year underlying profit during the NYSE session. The company cited weaker commodities prices and rising costs.
Iron ore, which is Rio Tinto’s bread and butter, saw revenue decline due to lower prices, despite a 3% production increase.
However, the company expects unit costs to remain stable in 2024, reflecting its focus on operational efficiency.
Copper, another key commodity, saw similar trends, with lower prices offset by production growth.
Despite the headwinds, Rio Tinto rewarded shareholders with a generous final dividend of USD$2.58 per share, representing a year-on-year increase.
“This move underscores the company’s commitment to capital returns, even amidst a volatile market environment,” said Farhan Badami, market analyst at eToro.
“That being said, challenges remain; geopolitical tensions, a potential slowdown in global growth, and ongoing cost pressures could impact future performance.
“Rio Tinto will need to continue its focus on operational excellence, project development, and cost control to navigate these headwinds and deliver sustainable value for shareholders,” said Badami.
The NYSE-listed Rio shares tumbled by -0.67% on the news.
In other markets …
Gold price traded flat at US$2,024.40 an ounce.
Oil prices were up around +1%, with Brent now trading at US$83.05 a barrel.
The benchmark 10-year US Treasury yield lifted by 5 basis points (bond prices lower) to 4.32%.
Iron ore futures slumped a further -1.5% to US$119 a tonne.
The Aussie dollar was flat at US65.51c.
Meanwhile, Bitcoin fell by -1.6% in the last 24 hours to US$51,263.
5 ASX small caps to watch today
QuickFee (ASX:QFE)
Total revenue for H1 was up 35% on pcp to $9.3m, with positive momentum across all key metrics. Both Australian and US revenue were up by 52% and 24% respectively. Quickfee continues to track towards operating profitability, with H2 FY24 expected to be stronger than H1 FY24.
Auric Mining (ASX:AWJ)
A toll milling agreement has been executed with Greenfields Mill, Coolgardie. The contract is to process a minimum of 300,000 tonnes of ore in 2024. Mobilisation has commenced this week, and mining will commence the week starting 4 March. First parcel of ore is expected at Greenfields Mill by mid-April.
LGI (ASX:LGI)
LGI, the leader in recovery of biogas from landfill, has appointed Jarryd Doran as its new CEO, effective March 1. Doran has been with LGI since 2014, and brings a wealth of practical experience and waste industry knowledge to the CEO role, having more recently served as the company’s COO since May 2016.
Veem (ASX:VEE)
The marine propulsion maker’s revenue for the half-year was $37.5m, up 37% on the pcp. EBITDA and NPAT were $6.9m and $3.5m, up 65% and 92% respectively on pcp. In terms of outlook, Veem expects to be able to continue at the higher level of hours worked through the rest of FY24, but remains vigilant of cost increases.
Aurum Resource (ASX:AUE)
Aurum has purchased a third diamond drill rig and accessories to expedite exploration at its Boundiali Gold Project in Côte d’Ivoire, West Africa. Aurum acquired two existing Nock 600 diamond drill rigs through its acquisition of Plusor Global late last year. Over the past five months, these two diamond drill rigs have drilled more than 9,000m of diamond holes at the two exploration tenements of the Boundiali Gold Project.
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