• The ASX fell modestly on Monday amid concerns around the debt ceiling crisis
  • New regulations for the BNPL sector
  • China bans US chip giant Micron Technology

 

The ASX 200 fell -0.15% today as losses in Financials, Real Estate and Discretionary stocks were offset by gains in the Energy sector.

Local investors were weighed down by the prospect of a US debt default. President Biden and House Speaker McCarthy will resume their talks today (US time), and without a deal, the US could default on its US$31.4tn debt.

“We have got 11 days to go,” McCarthy said on Sunday, as he urged Biden and Democrats to be “sensible about this.”

Goldman Sachs has estimated that the Treasury Department will have its cash levels drop below the critical US$30 billion level by June 8th or 9th, and will be unable to meet its federal obligations if the debt ceiling is not lifted.

Also making the news today was the announcement of tougher regulations for the local Buy Now Pay Later (BNPL) industry.

Financial Services Minister Stephen Jones has revealed that BNPL providers will be treated as a credit product, in a speech to the Responsible Lending and Borrowing Conference this morning.

This means that BNPL companies operating locally will now have to determine whether their products are suitable for current users, as well as conduct an affordability test for new customers.

NOW READ: New laws finally bring clarity to the BNPL sector – here’s how the market reacted

 

China bans US chip giant Micron Technology

Closer to home, China has hit back and accused the G7 nations of collaborating to “smear and attack” China.

China has summoned the Japanese ambassador to register an official protest, and warned the UK to stop “slandering” the country.

China has also banned US memory chip giant Micron Technology, saying the company poses “serious network security risks”.

In response, the US called the move “distortions of the memory chip market caused by China’s actions”.

It was China’s first major move against a US chip maker as tensions increase between the two countries.

 

Big rush into crypto derivatives

Aussie derivatives broker Eightcap said that since January 2023, its platform has seen more than 50% increase in volume for crypto derivatives (month on month), as investors sentiment favours the asset that is by far best performing this year.

The 60% return year to date of Bitcoin has by far beat all other asset classes, including gold and silver, the S&P500, Nasdaq and other equity index markets across the globe.

“It appears the demand in crypto has been fuelled by buying frenzy, and new-found confidence emerges in investors and traders especially after the FTX catastrophe,” said Eightcap’s Zoran Kresovic.

Another big catalyst for Bitcoin’s price thrust has been the US banking crisis.

“Some people are arguing that Bitcoin and Ethereum could be considered the new hedge against market risk, especially as we have seen a recent “run on the banks” adding further pressure on the regulators to act promptly,” said Kresovic.

 

BIG CAP WINNERS

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Coal producer rose New Hope (ASX:NHC) rose almost 2% and led the Energy sector after the company reported that underlying EBITDA climbed in the three months to April.

For the quarter, NHC’s underlying EBITDA was $448.1 million, an increase of 14.8% compared to the January 2023 quarter, and an increase of 20.6% compared to the same quarter last year.

 

BIG CAP LOSERS

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Lendlease (ASX:LLC) fell 1% after announcing the completion of a further 21% sale of US Military Housing asset management income stream for $126 million. The company says its gearing level is maintained within the target range of 10-20%.

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