ASX set to slide as debt ceiling jitters weigh on markets

“The US economic expansion gathered further momentum in May, but an increasing dichotomy is evident,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

On Wall Street, electric vehicle maker Lordstown Motors fell 5.9 per cent to 28 cents after it announced a reverse stock split in order to boost its share price. Investors will get one new share for every 15 they currently hold. Its stock has remained below $US1 since mid-March.

On the winning side of Wall Street was Lowe’s, which rose 1.7 per cent after reporting stronger profit and revenue for the latest quarter than analysts expected. But it also cut its financial forecasts for the year partly because of lower-than-expected sales to do-it-yourself customers.

Last week, rival Home Depot projected its first decline in annual revenue since 2009 in the aftermath of the housing market crash and financial crisis.

Retailers are among the last companies to report their results for the first three months of the year, and most companies have been beating expectations. Retailers in particular have gotten lots of attention because resilient spending by US households has been one of the main positives keeping the economy out of a recession.

Manufacturing and other areas of the economy are struggling under the weight of much higher interest rates meant to get inflation under control.


High interest rates have also meant stress for the US banking system. Three high-profile bank failures since March have rattled the system, and Wall Street has been on the hunt for the next bank that could suffer a debilitating drop in confidence by its customers.

Some of the heaviest scrutiny has been on PacWest Bancorp, but it’s rallying for a second day after announcing the sale of a $US2.6 billion ($3.9 billion) portfolio of real-estate construction loans. It’s up another 13.4 per cent after jumping 19.5 per cent Monday.

Other banks also rallied, including a 5.7 per cent jump for Zions Bancorp. and a 4.9 per cent climb for Comerica.

Also helping to limit losses for Wall Street were energy stocks, which climbed with the price of crude oil. Exxon Mobil gained 2.7 per cent, and Chevron rose 3.2 per cent.

In the bond market, the 10-year Treasury yield ticked up to 3.73 per cent from 3.72 per cent late Monday. It helps set rates for mortgages and other important loans.

The two-year yield, which moves more on expectations for the Fed, rose to 4.37 per cent from 4.32 per cent.

Most stock markets abroad fell, including a 1.3 per cent drop for Hong Kong and a 1.5 per cent slide for Shanghai.


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