Market Highlights: US bank stocks in shambles, Apple's earnings, and 5 ASX small caps to watch

The ASX is set to extend losses on banking crisis concerns
Shares in regional banks PacWest and Western Alliance collapsed
The ECB raised its key rate by 25bp

The ASX is poised to extend its losses on Friday following another selloff in New York. At 8am AEST, the ASX 200 May futures contract was pointing down by 0.45%.

Overnight, the three major stock indexes on Wall Street – the S&P 500, the Dow Jones and Nasdaq – fell by 0.50% ~ 1% as bearish sentiment on regional banks continues to spook investors.

The US banking sector is in shambles with regional banks getting crushed as expectations remain high that we will see more banking failures.

Two more US regional banks, PacWest and Western Alliance, are now seemingly spiralling into a rapid collapse.

PacWest sank another 50% last night as the bank considered options including a sale. Western Alliance also fell 38% despite the bank saying that it wasn’t for sale.

Meanwhile, Apple fell 1% but rallied by 2% after the bell following its Q2 update. Apple beat analysts’ forecasts on better-than-expected iPhone sales, though iMac and iPad sales fell short of estimates.

For Q2, Apple’s revenue came in at US$94.8 billion, versus US$92.6 billion expected.

Exercise equipment maker Peloton tumbled 13.5% after providing a downbeat guidance for the next quarter, and Shopify rose 24% after selling its logistics business to Flexport.

To economics where US jobless claims rose 242,000, slightly above the 240,000 consensus estimate, and an increase from the prior 230,000 reading. The US labour market is softening, but not quickly enough to justify rate cuts by the Fed.

How soon will ECB pause rates?

The European Central Bank (ECB) raised its key rate by 25bp to 3.75% overnight, matching analysts’ expectations.

ECB president Christine Lagarde said the decision was ‘almost unanimous” among the board members, but warned there could be more hikes.

“We have more ground to cover and we are not pausing. That’s extremely clear,” she said.

Experts believe the ECB is looking at a peak at the June or July meeting.

“The ECB might have a couple more rate hikes left in them as they see significant upside risks with inflation,” said Oanda analyst, Edward Moya.

“These last few meetings were supposed to be the time when the ECB plays catch up with their rate hikes, but it is starting to look like they might be done tightening a lot sooner.”

Cathie Wood buys more Coinbase shares

Crypto exchange Coinbase surged 8% despite revenue tumbling by 33% in Q1.

According to ARK Invest’s daily trade updates, Cathie Wood has added Coinbase shares substantially (worth around US$8.46 million) to her funds’ positions.

Bitcoin fell 1.25% in the last 24 hours to US$28,795.

In other markets, crude prices finally held steady, with WTI now trading at US$68.75 a barrel.

This comes as Saudi Arabia cut its official selling price for its Arab Light crude oil to Asia. Saudi Arabia’s crude oil price moves are closely watched in the oil markets, because they are generally viewed as a trendsetter when it comes to crude oil pricing.

“Saudi Arabia’s price reduction wasn’t as large as some were expecting, but it still confirms slowdown fears,” said Moya.

Gold was up half a per cent to US$2,047.78 an ounce.

The banking crisis is expected to keep demand elevated for safe-havens, putting gold bulls in a strong position.

“Gold is going to shine given this macro backdrop, and possibly eye a move above the US$2100 if the de-risking mood on Wall Street remains over the next few sessions,” said Moya.

Iron ore meanwhile fell -2.4% to $US98.85 a tonne.

5 ASX small caps to watch today

Splitit Payments (ASX:SPT)
Splitit has signed a new two-year partnership agreement with Visa to optimise consumer experience for Visa Instalments embedded in the Splitit solution. Under this deal, merchants can gain access to a Buy Now Pay Later payment option. The pilot will be launched by Splitit and Visa in the second half of 2023.

ImpediMed (ASX:IPD)
ImpediMed announced clearance of SOZO Pro, the company’s bioimpedance spectroscopy (BIS) system, by the US FDA. The Special 510(k) FDA clearances cover substantial equivalence between SOZO Pro and SOZO for the lymphoedema and protein calorie malnutrition (body composition) indications.

Burley Minerals (ASX:BUR)
Burley’s initial diamond core programme at the Chubb Lithium Project in Quebec has successful expanded the known mineralisation to the south and down-dip significantly beyond prior drilling. Drilling is continuing to test for mineralised extensions, both along strike and at depth, and initial assays are expected in 3-4 weeks.

Caprice Resources (ASX:CRS)
Significant Rare Earth Element soil anomaly has been identified over at least 300m, and open along strike with rock chips and soil samples returning up to 3,761ppm REO. Anomaly is coincident with outcropping zoned pegmatite, and numerous pegmatites that are still to be tested with fieldwork will recommence next week.

Encounter Resources (ASX:ENR)
ENR announced that diamond drilling has commenced at the Aileron Cu-REE project (100% ENR) in the West Arunta region of WA. The drilling is co-funded by the WA Government Exploration Incentive Scheme. Falcon gravity survey is currently being undertaken in parallel to further identify and refine drill targets.

At Stockhead we tell it like it is. While Encounter Resources and Burley Minerals are Stockhead advertisers, they did not sponsor this article.