Market Highlights: ASX to test new record in a high-stakes week; and 5 small caps to watch

Traders now see almost equal odds for the Fed cutting rates by 25 or 50 basis points this week, with a 49% chance of the larger cut.

The ASX will test new highs today. Pic: Getty Images

• ASX nears record high as Fed rate cut speculation grows

• Wall Street rallies ahead of Fed decision; Boeing and Adobe shares slide

• Another Donald Trump’s assassination attempt in the past few hours?

The ASX could hit a new all-time high on Monday on the back of growing investor excitement ahead of the US Fed Reserve's first interest rate cut in over four years.

At 8am, the S&P/ASX 200 Index was pointing 0.2% above Friday’s closing level of 8,100 points. The previous record was 8,115 points set in August.

On Wall Street, shares climbed across the board. The S&P 500 closed 0.54% higher, the Dow Jones was up by 0.72% and the tech heavy Nasdaq lifted by 0.65%.

Trading in interest-rate futures contracts now show there's almost as much chance the Fed Reserve will make a big interest rate cut (50 basis points) as a smaller one (25 basis points).

Although the consensus still favours a 25 basis points cut, traders now see a 49% chance of a 50 basis point cut when the Fed announces its decision on Wednesday (US time).

"The Fed likes predictability," Alicia Modestino at Northeastern University told AFP. "It's good for markets, good for consumers, good for workers."

"So a 25 basis point cut now, followed up by another 25 basis point cut in November after the next round of economic data, offers a somewhat smoother glide path for the economy," she added.

To stocks, Donald Trump was asked on Friday if he was selling off his shares in his social media company Trump Media & Technology Group.

He quickly said no, he wasn’t selling, sending shares of the company behind Truth Social shooting up by 12%.

And a few hours ago, there was apparently another attempted assassination on Trump near his Florida golf club. A Secret Service agent shot at a man with a suspected weapon, but Trump is safe. The FBI is investigating the incident.

Elsewhere, Boeing shares dipped 4% after factory workers went on strike, causing manufacturing to come to a halt at the company’s biggest Seattle facility.

Fitch, the credit rating agency, warned that a prolonged strike could lead to a credit rating downgrade and disrupt Boeing's operations.

Adobe fell sharply by 9% after the company issued guidance that disappointed investors who had hoped to see more AI thrown into the mix.

Investors were looking for more updates on Adobe’s AI plans, which many believe were not adequately addressed in the guidance statement.

In the commodities market, gold prices hit a new all-time high last week, with some analysts believing this might just be the start of a bigger rally.

“Regardless of this week’s outcome, gold prices will rise in the coming months,” said Colin Cieszynski at SIA Wealth Management.

And back home, unemployment data will be released on Thursday, and any signs of economic weakness will be closely watched.

Economists expect the unemployment rate to stay steady at 4.2%.

25 or 50?

Wall Street traders are closely watching the Fed with speculation that Chair Jerome Powell might make a decisive move on interest rates this week.

The market is abuzz with the possibility of a rare 0.50% point cut in interest rates.

"The best case scenario for stocks: OK economy and lower rates,” Priya Misra of JPMorgan Asset Management told Bloomberg.

However, while this optimism has fuelled a rally, some experts caution that a significant rate cut, such as 50 basis points (0.50%), could create market volatility.

Raphael Thuin from Tikehau Capital believes that kind of size could unsettle the market if not accompanied by reassuring communication from the Fed.

Skeptics, such as James St. Aubin of Ocean Park Asset Management, also argue that a large rate cut might not be the best move right now, and that the Fed should hold off on substantial cuts until there's a clearer need.

“There is plenty of room to cut down the road if the need arises. We’re just not there yet,” he said.

In other markets …

Gold price jumped by 0.8% to US$2,578.50 an ounce.

Oil prices were down 0.5% , with Brent crude now trading at US$71.60 a barrel.

The benchmark 10-year US Treasury yield was 2 basis points lower (bond prices higher) to 3.65%.

The Aussie dollar fell by 0.25% to US67.05 cents.

Bitcoin meanwhile was down 1% in the last 24 hours to US$59,431, and Ethereum also fell by 3% to US$2,348.

5 ASX small caps to watch today

Immutep (ASX:IMM)
Immutep’s drug efti, when combined with MSD’s KEYTRUDA, has shown promising results in treating first-line head and neck cancer, as presented at the ESMO Congress 2024. In patients with any level of PD-L1 expression, this combination therapy achieved a 31% overall response rate, compared to 18.5% for KEYTRUDA alone. The combination also demonstrated a high durability of response, lasting 17.5 months, and maintained a favourable safety profile. Also, the treatment increased lymphocyte counts, indicating efti’s effectiveness. Given the strong results and high unmet need, Immutep said it will discuss future steps with regulatory agencies, with overall survival data expected in 2025.

Westgold Resources (ASX:WGX)
Westgold has increased its production forecast for FY25 to 400,000–420,000 ounces of gold, up from 220,000–235,000 ounces in FY24. This boost is due to expected higher output from its Beta Hunt, Bluebird-South Junction, and Great Fingall mines. The company also reduced its all-in sustaining cost (AISC) guidance to $2,000–2,300 per ounce, down from $2,100–2,300. FY25 will be a key year for Westgold as the company focuses on expanding their operations and integrating new assets, with significant investment in exploration and growth.

Hazer Group (ASX:HZR)
Hazer has achieved a milestone in intellectual property protection, with the World Intellectual Property Organisation confirming that its latest patent application meets all requirements for patentability. This approval strengthens Hazer's patent portfolio and enhances protection for its hydrogen production technology. The application covers control systems for catalyst-based hydrogen production, extending Hazer’s global patent coverage. Also, a core patent has been approved in the Eurasian region, further broadening Hazer’s international protection.

Lepidico (ASX:LPD)
Lepidico has received a major endorsement from the UK Government for its Trelavour Hard Rock Project in Cornwall, which will use its proprietary lithium processing technologies. The project has been officially designated as a Nationally Significant Infrastructure Project by the Secretary of State for Housing, Communities and Local Government. The company is currently building a £9 million demonstration plant to process lithium mica from Trelavour and produce battery-grade lithium hydroxide.

Austal (ASX:ASB)
Austal has announced that Austal USA has secured a US$450 million contract from General Dynamics Electric Boat. This contract will allow Austal USA to expand its shipyard in Mobile to support the U.S. Navy’s submarine programmes. The new facility, set to be completed by 2026, will create around 1,000 jobs and help in fabricating and outfitting submarine components. Austal’s CEO, Paddy Gregg, praised the contract as a sign of growing confidence in Austal USA’s role in supporting the U.S. Navy’s needs.

Originally published as Market Highlights: ASX to test new record in a high-stakes week; and 5 small caps to watch