The ASX will open lower, tracking Wall Street
Tesla slumped after deliveries declined in the quarter
Aussie investors still love the Magnificent Seven trade
The ASX is set to open lower on Wednesday, tracking the slide on Wall Street. At 8am AEDT, the ASX 200 index futures contract was pointing down by -0.4%.
Overnight, the S&P 500 fell by -0.72% , the blue chips Dow Jones index was down by -1%, and the tech-heavy Nasdaq slumped by -0.95%.
Stocks fell on the back of “good news is bad news” trade, as recent solid economic readings have spurred speculation the Fed could hold rates higher for longer.
The Citigroup’s Economic Surprise Index — which measures the difference between actual releases and analyst expectations – has been bumped up to near its highest level in a year, according to Bloomberg data.
“Our base case is that the Fed engineers a soft landing and starts to cut rates in the second half of the year,” said Gargi Chaudhuri at BlackRock.
Stocks on the move last night include Tesla, which fell almost -5% after reporting Q1 vehicle deliveries of 386,810, a drop of 8.5% from the same quarter last year. This was Tesla’s first YoY decline since 2020.
Tesla explained the drop in a statement: “The decline in volumes was partially due to the early phase of the production ramp of the updated Model 3 at our Fremont [California] factory and factory shutdowns.”
US healthcare insurers tumbled, led by the largest US health insurer UnitedHealth, after the Biden government said it will hold the increase in premiums of private Medicare plans at the same rate in 2025 as for 2024.
The gold price hit a new record high once again after climbing +1.3% to US$2,280.25 an ounce. Oil prices meanwhile are on track for its fourth straight day of gains.
The next catalyst this week will be comments from Fed Chair Jerome Powell on Wednesday (US time).
Aussies still love the Magnificent Seven
One in five retail Aussie investors plan to increase their investments in the so-called ‘Magnificent 7’ big tech stocks in 2024, according to data from the latest Retail Investor Beat (RIB) from trading and investment platform eToro.
In the study of 1,000 Australian retail investors, 7% said that they plan to sell some of their holdings in the Magnificent 7 this year (which includes Amazon, Apple, Microsoft, Meta, Tesla, Nvidia and Alphabet), locking in profits.
A further 10% said they would reduce the amount of new capital they invest in these companies in the months ahead, while the majority of Aussie retail investors (42%) won’t make any changes to their allocation.
The RIB findings follow a blockbuster 14 months for these seven companies, with their collective share price up 90% since January 2023.
When asked what sector they will prioritise in 2024, Aussie retail investors were most likely to say tech (15%), followed by financial services (12%).
The number of investors holding AI-related stocks remains steady, shifting slightly from 20% to 19% in the first quarter of 2024, showing that the Magnificent 7 continue to be reliable, worthwhile investments for Aussie retail investors.
In other markets …
Gold price keeps climbing, rising by +1.3% overnight to to US$2,280.58 an ounce.
Oil prices also rose +1.8%, with Brent now trading at US$89.27 a barrel.
The benchmark 10-year US Treasury yield lifted by 3bp (bond prices lower) to 4.36%.
Iron ore futures traded flat at US$101.35 a tonne.
The Aussie dollar climbed by +0.4% to US65.21c.
Bitcoin meanwhile slumped -6% in the last 24 hours to US$65,330.
Bitcoin’s fourth halving is around the corner, and even that will reduce the introduction of new bitcoin supply by 50%.
According to Coinbase Reseaerch, the BTC price will surge after the event (due to lower supply and higher demand) – a trend that has been consistent in the past.
5 ASX small caps to watch today
Develop Global (ASX:DVP)
The Woodlawn Production Restart Study has shown that the project’s pre-tax NPV has jumped 37% from the previous estimate in Sep-23 to $658m. Pre-tax free cashflow has soared 60% from $626m to $1b, based on a 10-year mine plan. Mine plan shows restart capital cost of just $42m and first production in H1 2025. These results mean Develop has several funding options, including a potential minority interest sale.
Podium Minerals (ASX:POD)
Podium announced a substantial increase in its Inferred Mineral Resource Estimate (MRE) at its 100% owned Parks Reef Platinum Group Metal (PGM) Project in Western Australia. The Inferred 5E PGM Resource has increased by 27% to 7.6Moz, from the previous MRE of 6.0Moz, adding 1.6Moz of 5E PGM elements platinum, palladium, rhodium, iridium, and gold.
Orcoda (ASX:ODA)
The smart transport tech company announced that its wholly-owned subsidiary, Orcoda Healthcare and Transport Logistics, has executed several Software-as-a-Services (SaaS) contracts with community transport providers across Australia. The company was awarded 4 new multi-year SaaS contracts for a period of 3 years, with an estimated ~$330k aggregate incremental revenue contribution to Orcoda for this initial term.
Ramelius Resources (ASX:RMS)
RMS reported record group quarterly gold production of 86,928oz (Guidance 70,000 – 77,500oz). Previous record group gold production was 86,516oz in June 2020 quarter. The company holds cash & gold balance of $407.1m , with free cash flow of $125.3m. Previous record free cash flow was $69.4m in the June 2020 Quarter. RMS says Q3 AISC (all-in sustaining costs) will be materially lower than guidance due to record gold production.
IXUP (ASX:IXU)
The data security company has signed a Commercial Partnership Agreement with Las Vegas based U.S. Integrity, to jointly target specific regulated gaming technology opportunities, initially focused on North America and Australia, and eventually targeting all major global gaming jurisdictions. IXU says this is a first step in a potential deeper relationship between the parties, which have a jointly held aim to become a leader in the rapidly growing RegTech market.
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