• The ASX is set to surge on Monday after a big rally on Wall Street
  • US regulators are mulling a ban on short selling
  • New York wants more authority on crypto exchanges


The ASX is poised to gain strongly at the open following a big rally in New York. At 8am AEST, the ASX 200 May futures contract was pointing up by 0.9%.

On Friday, stocks on Wall Street had their best one-day gain since January 6, with the S&P 500 surging by 1.85%, the Dow by +1.65%, and tech-heavy Nasdaq by +2.25%.

Apple shares rose by 4.7% after its better than expected quarter, hitting a nine-month high.

PacWest Bancorp rebounded 82% and regained some of last week’s losses, amid signals that some of the regional bank selling has been overdone. Its rival Western Alliance Bancorp also bounced back 49%.

Adding to the bullish momentum was the US non-farm payrolls report which showed job growth accelerated in April and wage gains increased solidly, suggesting the labor market has stayed strong despite all the turmoil.

The S&P 500 VIX index, which measures the stock market’s volatility and is sometimes called the “Fear Index”, fell by 14%.


Ban on short selling?

US regulators are reportedly calling for greater regulatory oversight of short selling practices.

In the wake of the banking crisis, short sellers have raked in huge profits from plummeting share prices of regional banks. A Federal investigation into the possibility of market manipulation behind the significant fluctuations has now begun.

The White House has also said that it wants to monitor “short-selling pressures on healthy banks”.

While short selling is not illegal, manipulating stock prices is. The SEC defines manipulation as “the intentional or wilful conduct designed to deceive or defraud investors by controlling or artificially affecting stock prices”.

“The pressure on the regional banks appears to have got out of hand, and some traders are fearful that we could eventually see a ban on short-selling,” said Oanda analyst, Edward Moya.

“Europe does it so it doesn’t seem far-fetched for a short-selling ban to get implemented considering all the additional stress that is putting on the economy.”


In other markets…

Crude prices rose half a per cent, with WTI now trading at US$71.69 a barrel.

Oil seems to have found a bottom last week as risk appetite improves and banking turmoil eases.

“The oil fundamentals for supply are still somewhat bearish, but expectations are for OPEC+ to take care of that at next month’s meeting on output,” said Moya.

Gold was flat at US$2,015.27 an ounce, while iron ore was down -0.7% to $US98.70 a tonne.

NOW READ: Central banks buying gold at ‘extraordinary levels’ as price nudges ATH

Bitcoin also traded flat in the last 24 hours to US$28,861.

A bill is currently being proposed to give the New York Department of Financial Services more crypto authority.

The proposed legislation would require crypto exchanges to have independent public audits of financial statements, among other new requirements proposed by New York Attorney General Letitia James.


5 ASX small caps to watch today

Adelong Gold (ASX:ADG)
Assay results for follow-up drilling program at Gibraltar Project in NSW have been received. Results confirmed strong multiple vein system west of the Gibraltar mine workings including: 2m @6.16g/tAu from 73m, and 1m @ 9.15g/tAu from 148m. Further results are expected in the coming weeks for drilling that has been completed at the Caledonian and Sawpit deposits.

The robotic tech company says its Hadrian X robot has achieved a new sustained lay speed record of over 300 blocks per hour, with USA format cement masonry blocks, far surpassing the highest ever recorded peak lay speed of its predecessor, the Hadrian 109. The company says the new lay speed record is expected to be surpassed as the testing and calibration program progresses.

Activeport (ASX:ATV)
Activeport has entered into a non-binding agreement to acquire its supplier Turnium Technology, which is also an industry leader in cloud-native software-defined wide area networking (SD-WAN) software development. The acquisition will see ActivePort’s reach extended into North American markets. A non-cash share swap of 100% of the Turnium shares for ActivePort shares is currently being considered.

Lithium Australia (ASX:LIT)
Lithium Australia will sell 70% of its Lepidolite Hill Lithium Project to Eastern Resources (ASX: EFE). Eastern Resources will pay a total cash consideration of $550,000 in three tranches. A joint venture partnership between Lithium Australia and Eastern Resources will be formed upon completion. Lithium Australia is free carried until the notification that a DFS has been completed. Before the DFS notification, Eastern Resources can elect to acquire Lithium Australia’s remaining 30% interest by paying $1m in cash or shares.

Red 5 (ASX:RED)
Red 5 says the King of the Hills (KOTH) Gold Mine, located in the Eastern Goldfields region of WA, has delivered a second consecutive month of record gold production in April, producing 18,633oz of gold (up from 17,550oz in March). KOTH produced 18,633oz in April from 0.40Mt of ore processed at an average head grade of 1.54g/t with a record gold recovery of 94.2%.