ASX to open higher as the S&P 500 inches toward a new high
Tesla to spend US$500m in in expanding its charging network
Treasurer Jim Chalmers calls critical minerals a “golden opportunity”
Aussie shares are poised to open lower on Monday, in line with Wall Street’s modest gains. At 8am AEST, the ASX200 futures contract was pointing up by +0.2%.
On Friday, the S&P 500 rose by +0.16%, its highest level since early April. The blue chips Dow Jones index was up by +0.32%, but the tech-heavy Nasdaq slipped by -0.03%.
The S&P 500 inched back toward its record high as energy, consumer discretionary and consumer staples stocks lifted higher.
Chipmaker TSMC rose almost +1% after reporting a sales jump of 60% in April, citing sustained AI demand and a revival in smartphones demand.
Tesla was down -2% as Elon Musk said the company intends to invest over US$500 million in expanding its charging network, just days after significant layoffs within the EV maker’s Supercharger division.
Shares of US-listed Chinese electric vehicle manufacturers such as Nio, Li Auto, and Xpeng experienced declines on Friday after reports emerged that President Biden is preparing to introduce new tariffs on China this week – including electric vehicles, batteries, and solar cells.
The best gainer on Wall Street was pharmaceutical stock Novavax, which rose +98% after the company signed a US$1.4 billion deal with French company Sanofi to co-commercialise its current COVID-19 vaccine worldwide.
What else is happening?
On Friday, Fed Reserve Governor Michelle Bowman expressed her view that interest rates should remain unchanged “for a bit longer,” echoing sentiments shared by other Fed Reserve officials in recent weeks.
“I’ve sort of had an even expectation of staying where we are for longer. And that continues to be my base case,” she told Bloomberg News.
The US will release its CPI report for April on Wednesday (US time).
Analysts anticipate that US inflation will maintain the trend of elevated inflation seen this year, and should that materialise, the CPI report is poised to bolster the argument for the Fed to delay any rate cuts until July or beyond.
Back home, it’s Budget week as Treasurer Jim Chalmers hands down the nation’s budget on Tuesday.
Chalmers has said that this Budget will include a significant increase in support for the critical minerals industry, labelling it a “golden opportunity” in the economic landscape.
Speaking with Bloomberg in Canberra on Sunday, Chalmers said:
“The critical minerals space is one of the reasons why there is so much attention from global and domestic investors, but we need to make sure we can attract and deploy that.”
In other markets …
Gold price rose by +0.1% to US$2,361.74 an ounce.
Oil prices fell around -0.25%, with Brent crude now trading at US$82.52 a barrel.
The benchmark 10-year US Treasury yield was up 3 basis points (bond prices lower) to 4.50%.
The Aussie dollar fell by -0.1% to US66.07 cents.
Bitcoin meanwhile was up by +0.60% in the last 24 hours to US$61,331.
5 ASX small caps to watch today
AdAlta (ASX:1AD)
AdAlta and Cell Therapies (CTPL) have signed a deal, designating CTPL as the preferred manufacturing partner for AdAlta for its cellular immunotherapies. This strategic deal enhances AdCella, AdAlta’s cellular immunotherapy venture with SYNthesis BioVentures (SYNBV), by providing crucial support in product development, manufacturing, and supply chain operations. CTPL’s involvement will also aid AdCella in achieving its objective of offering innovative cellular immunotherapies originating from Asia.
Lightning Minerals (ASX:L1M)
Lightning provided an update on the progress of the Dundas South Project, and shared assay findings from its recent drilling campaign on tenement E63/2000. This drilling initiative targeted lithium and rubidium prospects identified through regional soil exploration endeavors. The results underscore a consistent presence of robust lithium and rubidium deposits, with concentrations reaching as high as 994ppm lithium and 1,834ppm rubidium at depths of up to 26m.
Vanadium Resources (ASX:VR8)
Vanadium gave an update on its Steelpoortdrift Vanadium Project in South Africa. The company has signed a non-binding MOU with Zhongxin for the offtake of V2O5 production from this Project. This MOU outlines the supply of 4ktpa of V2O5 flake over five years, with an option to extend for another five years. Further negotiations will cover price, product quality, and other offtake terms. This agreement with Zhongxin adds approximately 37% to VR8’s planned annual average V2O5 flake production capacity of around 11ktpa from the initial Phase 1 operation of the Project.
Southern Cross Electrical Engineering (ASX:SXE)
Southern Cross has announced an upgrade to the profit guidance it gave to the ASX on 6 May. Following today’s announcement of the acquisition of MDE Group, SXE now anticipates FY25 EBITDA will increase from at least $48m to at least $53m.
Given the timing of completion of this acquisition, MDE’s contribution to FY24 is expected to be immaterial and therefore SXE Greaffirms its previous guidance that FY24 profitability will match FY23 EBITDA.
Ramelius Resources (ASX:RMS)
Updated Mineral Resource Estimate, now including adjacent Lone Pine and Theakston deposits and incorporating recent drilling and mining information were: 21Mt at 1.7g/t for 1,200,000 ounces (up 64% on June 2023 MRE). This combines previous Mineral Resource Estimate of 730,000 oz and Exploration Target of 125,000-225,000 oz into a single resource, with the result well exceeding the upper end of the Exploration Target range, and also containing over 75% in either the Measured or Indicated categories.
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