Trading Day: live markets coverage; Hayne lashes bank lawyers; plus analysis and opinion
The ASX has ticked lower amid sharp mining falls, as traders turn their attention to the overnight US CPI print.
And that’s a wrap for the Trading Day blog for Tuesday, March 13.
4.25pm: Miners drag on bourse
The local share market finished the session slightly weaker as the sinking iron ore price dragged the major miners lower.
At the close of trade, the benchmark S&P/ASX200 had lost 21.422 points or 0.36 per cent at 5974.699 points. The broader All Ordinaries index had dropped 24.27 points or 0.4 per cent at 6077.102 points.
The iron ore price fell again on Monday night, down 1.8 per cent to $US69 per tonne according to The Steel Index, as markets remain cautious on US steel tariffs and as Chinese inventories continue to run at record highs.
“The ASX is struggled today as ongoing iron ore price falls continue to drag,” said Moody’s senior economist Katrina Ell.
“The outlook suggests further price falls are likely, so the subsequent expectations of profit downgrades are weighing on stocks.”
Investors shrugged off a record NAB monthly business conditions result released this morning, the index booking a record high for the month of February.
“The strong result is a testament to the healthy labour market and expectations of further gains,” Ms Ell said.
BHP lost 0.83 per cent to $28.67 while Rio Tinto plunged 1.96 per cent to $74.00.
NAB stepped back 0.16 per cent to $30.35 while Westpac turned down 0.2 per cent to $30.20. ANZ was cut by 0.38 per cent to $28.49 while Commonwealth Bank weakened 0.4 per cent to $77.05.
4.04pm: Asian shares mixed on trade outlook
Shares were mixed in Asia in afternoon trade following a lacklustre day on Wall Street. Investors are keeping a close eye on tensions over trade following President Donald Trump’s announcement of hikes on steel and aluminium tariffs.
Shares in Shanghai and Hong Kong fell as China announced a revamp of its financial regulatory regime.
Keeping score: Japan’s Nikkei 225 index edged 0.2 per cent higher to $21,875.43 while South Korea’s Kospi added 0.1 per cent to 2,486.31. The Hang Seng in Hong Kong fell 0.3 per cent to 31,507.76 and the Shanghai Composite index declined 0.2 per cent to 3,319.12.
Shares rose in Taiwan and were mixed in Southeast Asia, with the SET in Thailand falling 0.2 per cent.
AAP
Robyn Ironside 3.45pm: First home buyers back with a bang
Almost one in five home loans was taken out by a first home buyer in January, in the best result for property market newcomers in five years.
Housing finance figures released today by the Australian Bureau of Statistics showed first home buyers accounted for 18 per cent of owner occupier loans.
Housing Industry Australia (HIA) senior economist Shane Garrett said increased grants to first home buyers in New South Wales and Victoria had helped rekindle the group’s participation in the property market.
“The experience of the past year proves that governments can play a very positive role in bringing home ownership within much closer reach for younger Australians,” Mr Garrett said.
“The upcoming round of state and territory budgets represents a big opportunity to widen first home buyer participation even further.”
David Swan 3.30pm: Cryptocurrencies ‘just like dotcom bubble’
The founder of Asia’s fastest growing cryptocurrency warns most of them won’t survive the next few years, with NEO founder Da Hongfei predicting a crash much like the dotcom bust of the 1990s.
Da Hongfei, who has expressed support for regulation in the cryptocurrency and blockchain ecosystems, told The Australian on Tuesday that most of the over 1500 cryptocurrencies that exist today will fail, because they lack a strong reason for existing.
“A lot will disappear,” he said. “It’s just like the dotcom bubble. The companies doing the infrastructure will survive. Like Cisco did, in the early days. And gradually the value goes to the company closest to the consumer, like Apple and Facebook, they’re focused on consumers. It’s the same.
“The next two to three years, we still need to build the road. Our DNA is building roads.”
NEO was founded by Mr Hongfei four years ago in China, and is currently the sixth largest cryptocurrency in the world by market capitalisation at about $US5.6bn.
Ben Butler 3.11pm: Hayne questions banks’ obedience to law
Banking royal commissioner Kenneth Hayne has questioned the attitude of the financial services industry to breaches of the law.
In the commission’s first case study on NAB’s introducer program, which rewards businesses with a commission for new successful lending referrals, Mr Hayne intervened to warn the NAB witness that he might have to look at “the notion of obedience to the law”.
Acknowledging that the industry was large and things were bound to go wrong from time to time, Mr Hayne went on to say:
“One thing I might have to look at is what is the attitude of the industry … to obedience to the law.
“Obedience to the law that governs their affairs.
“There may be a difference between a breakdown in controls and an acknowledgment of a breach of laws.
“I don’t want people ignoring the fact that these are ideas at least on the table.”
Richard Gluyas 3.05pm: Thorburn promises transparency from NAB
National Australia Bank chief executive Andrew Thorburn has pledged that the bank will act in an open and transparent way in the financial services royal commission, as NAB’s introducer program comes under scrutiny today in the commission’s first case study.
Mr Thorburn said in a letter to customers, employees and shareholders that it was a “confronting reflection point” for the bank that there had been times in the past where it had not done the right thing by customers.
“The simple fact is that none of these issues are acceptable,” he said.
“They should not have happened in the first place, and they show we haven’t always done right by our customers or treated the community with respect.
“This is not good enough.”
The NAB chief promised that the bank would act throughout the royal commission and beyond in an open and transparent way.
Ben Butler 2.42pm: Hayne smacks down bank lawyers
Banking royal commissioner Kenneth Hayne has been smacking down the phalanxes of highly paid commercial lawyers employed by the big banks.
The commission is hearing about misconduct between 2013 and 2016 in NAB’s introducer program, where the bank pays people a commission to bring in potential home borrowers.
As the executive responsible for the area, Tony Waldron, was about to be sworn in, NAB’s counsel, Wendy Harris QC, rose to ask if six sentences from the reams of exhibits attached to his witness statement could be redacted on the grounds of legal professional privilege.
“Ms Harris, this is most unsatisfactory.,” Mr Hayne responded. “These things should have been dealt with out of court without everybody sitting here.”
Gamely, Ms Harris persisted.
“It’s too late,” Mr Hayne said. He said NAB could renew its application at 4pm, the end of the sitting day.
2.25pm: Investors unimpressed with Labor’s dividend plan
Investors seem unimpressed by Labor’s proposed crackdown on dividend imputation, according to Bell Potter’s Richard Coppleson.
“The investment community don’t seem very impressed,” the award-winning stockbroker says. “It’s possibly just adding to the weakness.”
“All these people are going to do is drive people out of the sharemarket in the property market and cause a bubble ... they must be mad.”
Australia’s S&P/ASX 200 share index has fallen as much as 0.8pc to 5949.6 points, underperforming global markets.
Index last down 0.7pc at 5953.3.
Eli Greenblat 2.10pm: Unintended consequences of Labor plan
One of the nation’s most respected and successful fund managers, stockpicker Geoff Wilson, has slammed Bill Shorten’s proposed changes to the nation’s dividend imputation system as punishing the “full gamut of Australian investors”, arguing our imputation system remained the envy of the world.
Mr Wilson also warned the policy shift announced by the ALP could help feed a property bubble as investors switch from equities to property, both directly and in the form of real estate investment trusts (REITs) — representing a key unintended consequence that could have deleterious effects for the economy.
“There can be unintended consequences of this change one will be moving money away from corporate structures to structures that don’t pay corporate tax. Those areas are REITs or direct property.’’
Mr Wilson, who leads a portfolio of listed investment companies that have more than $2.7 billion invested mainly in Australian shares on behalf of 60,000 investors — many of them retirees — believes the ALP’s new policy unveiled today by the Opposition leader was another example of political parties meddling with the rules that only serves to create uncertainty.
1.45pm: Goldman Sachs’ heir apparent
David Solomon became the heir apparent at Goldman Sachs Group after his main rival for the top job abruptly resigned, moves that show the Wall Street powerhouse is continuing to move beyond its trading roots.
Harvey Schwartz will retire on April 20, and Mr Solomon will become the sole operating chief and president. The two men were jointly elevated to the roles in December 2016, in direct competition for one of the most-coveted jobs on Wall Street.
It came after Goldman’s board of directors last month anointed Mr Solomon as the eventual successor to current CEO Lloyd Blankfein, according to people familiar with the matter.
Last August, Mr Solomon told The Australian that all large companies that operate in the global marketplace “have to worry about their reputation and the financial services industry is no different”.
“We (at Goldman Sachs) are very focused on our clients and serving them well,’’ he said.
“If we stay focused on those things, over the long run we will do just fine.’’
Asked if he was frustrated about the poor image of the banking sector, he replied: “My job is not to be frustrated but to focus on the things we can control.’’
Commenting on the rise of passive investing, Mr Solomon agreed there had been a “secular shift’’ in the market and that passive investing was “here to stay’’.
But he suggested it may not be a permanent shift and that in a different environment, the pendulum may swing back to active managers.
“You are looking at a window in time,’’ he said.
“There is no question in the current macro environment it has been harder for certain active strategies to make money.
“That doesn’t mean it is permanent.’’
Damon Kitney
With Dow Jones newswires
1.30pm: Miners drag stocks lower
Australian shares are lower at lunchtime, with the materials and industrial sectors weaker following falls in commodity prices and a mixed showing on Wall Street overnight.
The benchmark S&P/ASX200 index was down 43.5 points, or 0.72 per cent, at 5,952.6 points at 1.30pm AEDT on Tuesday, with the big miners lower and soft overnight leads weighing on most sectors.
The price of iron ore fell away again overnight, as markets remain cautious about the US steel tariffs signed into law last week by US President Donald Trump and as iron ore inventories particularly in China continue to grow. In the US, the S&P 500 and the Dow Jones Industrial Average fell with the US tariffs still weighing on US industrials.
Locally, the iron ore trio lost ground in morning trade, BHP Billiton 1.4 per cent lower, Rio Tinto down 2.1 per cent and Fortescue Metals shedding 2.0 per cent.
The Port Kembla-based steelmaker, BlueScope Steel was down 0.8 per cent, at $15.75.
The local gold miners made small gains, but not Newcrest which lost a further two per cent as investors await further news on its latest Cadia mine shutdown. Rising US shale output and tighter OPEC supplies began to weigh on local energy producers through the morning, Santos Oil was 0.9 per cent lower to $4.935 and Oil Search lost 0.4 per cent to $7.12.
12.35pm: Stocks turn down 0.7pc; negative for the week
Australian shares have been surprisingly weak today: the S&P/ASX 200 has fallen as much as 0.7pc to a two-day low of 5956.5 amid broadbased falls.
The index has slipped below initial chart support from the top of last week’s range at 5979.5. It has also turned slightly negative for the week.
Whereas overnight futures pointed to an opening fall of about 0.1pc, the index is actually the worst in the region today.
Volume is about 15 per cent below average — light for a Tuesday. There seems to be just a lack of buying interest before US CPI data tonight.
12.30pm: ‘This is not science fiction’
Atlassian boss Mike Cannon-Brookes has warned of massive economic and social pain to come if Australia does not face challenges posed by automation and technological disruption, declaring ‘this is not science fiction’.
Mr Cannon-Brookes addressed a senate committee on the future of work in Melbourne Tuesday morning, putting his case that the country’s visa system was broken and declaring that planning is needed now to maintain Australia’s economic prosperity. He said uncertainty around 457 visas has directly hurt his company’s ability to hire, and Australia’s success in the future will rely on its ability to attract the world’s best tech talent.
Speaking exclusively to The Australian at the sidelines of the committee, Mr Cannon-Brookes said he emailed the committee a week and a half ago out of frustration that there wasn’t anyone from a technology company represented.
“When I looked I was the only person presenting from an actual workplace or company, rather than some organisation which represents this group or that group. How do you talk about the future of work without people from workplaces, it’s a bit odd,” he told The Australian.
12.08pm: Trump blocks Qualcomm takeover bid
President Donald Trump blocked Singapore chipmaker Broadcom from pursuing a hostile takeover of US rival Qualcomm, ruling the proposed combination would imperil national security.
The decision, announced late Monday, abruptly ends Broadcom’s four-month, $117 billion bid to buy Qualcomm — a deal that would have been the largest ever completed in the technology industry.
In a statement, Broadcom said it “strongly disagrees” that the acquisition raises any national-security concerns. Qualcomm did not immediately respond to a request for comment.
Trump’s order gives Broadcom few options other than to drop its bid, said Macquarie Securities analyst Srinivas Pajjuri.
AAP
Ben Butler 11.43am: CBA, NAB blasted over submissions
Counsel assisting the financial services royal commission, Rowena Orr, QC, has blasted Australia’s biggest bank, the CBA, for swamping the inquiry with spreadsheets rather than coming clean about misconduct over the past 10 years.
Ms Orr also slammed NAB for its submission, which she said “did not grapple” with commissioner Kenneth Hayne’s request for a full confession of misconduct and conduct falling short of community standards and expectations.
Westpac last night also admitted it still needed to provide more information, she said.
Ms Orr this morning opened its first full public hearing by running through the main issues to be examined in the coming fortnight — home loans, car loans, credit cards, add-on insurance, overdrafts and account administration errors.
She said CBA’s first submission to the royal commission was at a “high level” and failed to disclose the full extent of misconduct or conduct that fell below community expectations, “as a number of other entities had done”.
A second submission last month was “not in a form that made it possible to understand the scale” of CBA’s issues, she said.
It contained “a large volume of spreadsheets containing ‘all details of compliance incidents” that had been lodged since 1 January 2013.”
However, these “compliance incidents” included potential problems as well as actually ones, she said.
11.38am: Housing finance weaker than expected
Housing finance was weaker than expected for January, but not by enough to affect financial markets.
The number of home loan approvals fell 1.1pc versus a 0.1pc fall expected by economists.
The value of owner occupied loan approvals rose 0.5pc from a downwardly-revised 1.1pc fall in December.
The value of investor loan approvals rose 1.1pc
11.31am: S&P/ASX 200 down 0.4pc
The index is now down 0.4pc at 5971.8. Volumes are 25 per cent below the 20-day average — light for a Tuesday — as the market awaits US CPI data tonight.
11.30am: Business conditions hit record high: NAB
Business conditions hit a record high in March although business confidence fell, according to the NAB Monthly Business Survey. The business conditions index rose three points to 21 points — the highest since the survey commenced in March 1997.
Business confidence fell two points to nine points but remained above average despite turbulent global financial markets last month. Pleasing for the policymakers, leading indicators in the survey strengthened, with a large rise in forward orders.
“While data can be volatile from month-to-month, forward orders have been on a rising trend for several years now signalling an improved outlook for the non-mining economy,” NAB chief economist Alan Oster said.
“Similarly, capacity utilisation is trending higher which is a positive for both future investment and employment.”
Employment conditions surged to a record high, while sales and profitability, already at high levels, had small gains.
Significantly, NAB’s Oster says that the employment index points to jobs growth of around 27,000 per month, close to the 12-month average of 32,500. “While this is below the average monthly growth rate in jobs recorded by the ABS over the last 12 months, the bottom line is that strong jobs growth will not be ending any time soon, which is good news for getting the unemployment rate down,” Mr Oster said. The strength in business conditions was broadbased with all major industry groups reporting above-average conditions. Mr Oster notes that the gap between the best and the softest performing industries is at a relatively low level with even the underperforming retail sector recording its highest reading in eight months. But the trend down in personal & recreational services over the past four months needs to be watched closely as it could indicate that softness in consumer spending is broadening beyond retail.
11.20am: Materials lead broadbased falls
Australia’s S&P/ASX 200 share index has fallen 0.3pc to 5974.8 with the materials sector leading broadbased falls after the S&P 500 stalled and commodities fell overnight.
But volume is 25 per cent below the 20-day average — light for a Tuesday — as the market awaits US CPI data tonight.
The early fall looks more a case of limited buying rather than active selling pushing the market down.
The index appears to be updating normally now after a technical issue earlier today.
Greg Brown 11.05am: Shorten plans business tax write-off
Business will be able to receive a 20 per cent tax reduction on assets worth more than $20,000 under plans unveiled this morning by Bill Shorten.
The Opposition Leader has announced Labor will implement the Australian Investment Guarantee, effectively expanding the instant write-off policy which allows small to write off assets worth less than $20,000.
Mr Shorten has promised all businesses would be able to deduct 20 per cent of any eligible asset, such as machinery, trucks and utes.
He said it would help grow business investment which had “collapsed by 20 per cent”.
“Under Labor’s Australian Investment Guarantee, only companies that make the decision to invest in Australia will benefit from this tax relief — while up to 60 per cent of the conservatives’ company tax handout goes directly to foreign shareholders,” Mr Shorten said.
“Unlike previous asset write-off schemes, Labor’s Australian Investment Guarantee is permanent — that means businesses can continue to take advantage of the immediate tax deductibility whenever they make a new investment in an eligible asset.”
10.58am: ASX investigating issue with index updates
aASX is investigating an issue with ASX 200 index updates, according to Bloomberg. S&P/ASX 200 index updates have been frozen since 1001 AEDT, but the issue only concerns the index updates and trade has not been impacted, ASX tells Bloomberg. Component stocks are updating as normal.
10.45am: Stocks in ‘wait-and-see’ mode
Australian shares have barely moved at the open of trade, following a mixed lead from Wall Street’s major stock indices and falls in commodities. The benchmark S&P/ASX200 index was flat at 5,994.2 points after the first half- hour of trade on Tuesday, with most sectors flat or down marginally. In the US, the S&P 500 and the Dow Jones Industrial Average slumped as worries about the US tariffs signed into law last week by President Donald Trump weighed on industrial stocks, but gains in tech stocks boosted the Nasdaq. The Dow Jones Industrial Average fell 0.62 per cent to 25,178.61, the S&P 500 lost 0.13 per cent to 2,783.02 and the Nasdaq Composite added 0.36 per cent to 7,588.33.
CommSec market analyst Steven Daghlian said the Australian share market was in a wait and see stance with little economic news or data out to sway the market on Tuesday morning.
“We are basically largely unchanged at the moment and are treading water but keep in mind we are coming off three straight days of gains,” Mr Daghlian said. “We got a mixed lead from Wall Street so the Dow Jones and the S&P 500 were a little lower and commodity prices were mostly lower as well, so that is not necessarily encouraging mining and energy stocks to lift.” Locally, the energy sector was marginally lower after oil prices fell as investors grappled with ongoing concerns over rising US output and tight OPEC supply.
Santos Oil fell 0.1 per cent to $4.975 and Origin Energy was down 0.5 per cent to $8.77 while Oil Search rose 0.4 per cent to $7.18.
Shares in Woodside Petroleum fell 0.4 per cent to $28.84 after the company confirmed it will operate the Scarborough gas field after securing the support of co-stakeholder BHP Billiton for its purchase of ExxonMobil’s 50 per cent stake in the Western Australia field.
The big four banks were all down with National Australia Bank the worst-off in the pack, and mining shares were flat with BHP Billiton, Rio Tinto and Fortescue Metals trading between 0.2 per cent and 0.9 per cent lower.
Meanwhile, the Australian dollar is marginally weaker, on the back of a fall in commodity prices overnight, but still higher than this time a week ago. At 1030 AEDT on Tuesday, the local currency was worth 78.69 US cents, up from 78.70 US cents on Monday.
10.20am: MS impressed by Domino’s European outlook
Morgan Stanley analysts are impressed by Domino’s European operations after a field trip to Germany and the Netherlands.
“Post the trip we have greater conviction in the long-term growth runway Europe provides Domino’s,” they say.
Morgan Stanley has an Overweight rating and $55 target price on Domino’s versus yesterday’s close at $43.70/share.
10.08am: Cadia dam a ‘major concern’: Macquarie
Macquarie has cut Newcrest to Underperform from Neutral with a $19.00 target price versus yesterday’s close at $21.59.
It says the tailings wall dam failure at Cadia which led Newcrest to slash its production and guidance is a “major concern”.
“We have taken a six-week production stoppage as a starting point but concede that length of the suspension could vary depending on whether Newcrest is able to utilise the Cadia Hill pit or southern tailings dam as alternatives,” the broker says. “Given the production issues caused by the earthquake in April 2017, we expect the value ascribed to Cadia to be discounted by the market until some certainty on the outlook is established.”
10.00am: S&P/ASX 200 likely supported near 5980
Australia’s S&P/ASX 200 should be relatively flat today after mixed leads from Wall Street and commodities.
While weaker commodities should weigh on the resources sector that could well be offset by gains in banks before their next dividend payments in May.
While the Dow Jones index fell 0.6pc last night, almost half of that was due to a 2.9pc fall in Boeing. That said, a 2.4pc fall in Caterpillar may trouble the resources sector.
On the charts, there’s no real catalyst for the S&P/ASX 200 break back down into the 5886-5980 range that prevailed last week. As such, 5980 should be solid support today.
Focus turns to NAB’s monthly business survey at 1130 ahead of US CPI tonight.
Index last 5996.1.
Ben Butler 9.57am: NAB’s Thorburn in pre-emptive apology
NAB chief executive Andrew Thorburn has issued a pre-emptive apology for bank conduct to be explored at today’s financial services royal commission hearing.
The hearing is to focus on NAB’s introducer program, in which it pays people commissions to refer potential customers for a home loan.
In an open letter to customers and employees Mr Thorburn said that “the focus of the royal commission will again demonstrate that what occurred is regrettable and unacceptable”.
“As we’ve responded to the Royal Commission’s requests for information over the last few months, it’s an important and confronting reflection point for us that there have been times in the past where we have not done the right thing for our customers,” he said.
“While many of these issues are public, we must continue to take action to strengthen our systems and processes so they don’t happen again.
“The simple fact is that none of these issues are acceptable.
“They should not have happened in the first place, and they show that we haven’t always done right by our customers or treated the community with respect.
“This is not good enough.”
Ben Butler 9.48am: Banks fork out $60m fixing issues
Australian banks have already spent more than $60 million fixing issues to be raised in the first fortnight of public hearings by the financial services royal commission, which starts today.
The royal commission, headed by former High Court judge Kenneth Hayne, will spend the next two weeks examining misconduct and other problems in home loans, car loans and consumer credit areas.
It follows a class action over one of the areas to be put under the spotlight, credit card insurance, announced yesterday by law firm Slater & Gordon.
In recent months, as the royal commission loomed, bank executives moved to position their institutions as having already dealt with the issues to be raised in the first public session, with new CBA boss Matt Comyn last week announcing it would stop selling credit card and personal loan insurance.
A second round of hearings next month will focus on one of the banking industry’s most scandal-ridden sectors, financial planning.
Read more
9.35am: Broker rating changes
Newcrest cut to Underperform — Macquarie
Newcrest cut to Hold — Shaw & Partners
James Hardie raised to Outperform — Credit Suisse
Fortescue started at Sell — Vertical Group
Elders raised to Hold — Wilsons
Credit Corp raised to Neutral — Evans & Partners
Rural Funds Group restarted at Buy — UBS
Monadelphous cut to Neutral — Credit Suisse
Summerset Group raised to Outperform — Credit Suisse
Matt Chambers 9.12am: Gas prices surge by 40pc
East coast wholesale gas prices paid by business and energy users jumped by nearly 40 per cent last year, while prices received by Origin Energy, Santos and Beach Energy jumped between 7 per cent and 14 per cent.
The figures, compiled by consultant EnergyQuest, show the growing impact of east coast LNG exports and increased gas power demand as older, cheaper gas contracts expire.
They contrast with a recent consultant report, commissioned by the COAG Energy Council, that the Australian Petroleum Production and Exploration Association said was “official” evidence that wholesale gas prices fell last year.
The conflicting price reports are partly driven by some price measurements only recording new prices while others, like the Australian Bureau of Statistics and producer data, include legacy contracts.
Read more
8.54am: Stocks to watch
BlueScope Steel: Shares in steel producer BlueScope bounced back on Monday, up 3.7 per cent, following US confirmation of Australian exemptions from tariffs on imported steel.
Immutep: Shares in Immutep surged more than 16 per cent on Monday after the cancer drug developer joined with pharmaceutical giant Merck & Co to trial a combination of drugs to treat lung, head and neck, and ovarian cancers.
Newcrest Mining: Newcrest will take a financial hit from the dam wall breach at its NSW goldmine, Cadia, which put pressure on its shares on Monday, down 4.6 per cent.
Woodside, BHP: Woodside Petroleum has confirmed it will operate the Scarborough gas field after securing the support of co-stakeholder BHP Billiton for its purchase of ExxonMobil’s 50 per cent stake in the Western Australia field.
Robert Gottliebsen 8.48am: ALP’s attack on retirees
By discriminating against retirees the ALP has left the door open for Treasury to convince the Coalition government to make a frontal attack on franking credits.
Later in this commentary I will set out what they will be now be considering.
But first let’s look more closely at the way self-funded retirees are under attack.
Because they are not yet a big enough part of the community to influence elections, both parties reckon they are fair game.
Under the Peter Costello rules, superannuation funds in pension mode were tax-free. The current Coalition government limited the tax-free portion to $1.6 million and introduced other nasties to attack retirees. One of those nasties encouraged people with in the vicinity of between $400,000 and $800,000 in assets to liquidate part of those assets and go on the government pension. They received a 7.8 per cent return on assets liquidated. Cruises have boomed thanks partly to the Coalition. It was stupid policy but the Coalition attitude was: “Who cares? Self-funded retirees don’t carry enough votes and the increased eventual pension bill will be met by a future government”.
Read more
Simon Benson 8.30am: Another class-war tax grab
Bill Shorten has opened a new front in his class-war tax grab on the wealthy, with a pledge to axe cash refunds for excess imputation tax credits claimed by super funds, which are estimated to balloon to almost $60 billion over the next 10 years.
Unwinding a superannuation measure introduced by the Howard government, the Opposition Leader will announce today that a Labor government will abolish the rebate component of the imputation credits system that benefits primarily high-wealth shareholders and self-managed super funds by allowing them to cash in unused imputation credits.
Mr Shorten claims that the chief target of the policy is about 200,000 of the 600,000 self-managed super funds in the country, the largest of which have been claiming up to $2.5 million in cash rebates under the imputation credit system. Labor says the policy will not apply to 92 per cent of the 12.8 million Australians who lodge annual tax returns.
While 90 per cent of the tax hit is directed at self-managed super funds, a small number of “low-income, high-wealth” retirees could also be caught in the net if, for example, they had other assets held in tax-free superannuation funds.
Read more
7.40am: ASX to open flat
Australian stocks are expected to have a flat opening, following losses on Wall Street and in commodity prices.
At 7.40am (AEDT), the Australian share price futures index was up three points, or 0.05 per cent, at 5,992.
In the US overnight, the S&P 500 and the Dow Jones index fell as worries about the metal tariffs signed into law last week by President Donald Trump weighed on industrial stocks.
The Australian share market yesterday closed higher after regional markets lifted on jobs data positivity out of the US and Australian markets strengthened on the exemption from US tariffs on imported steel and aluminium.
The benchmark S&P/ASX200 was up 32.9 points, or 0.55 per cent, at 5,996.1 points, while the broader All Ordinaries index ended up 32.3 points, or 0.53 per cent, at 6,101.4 points.
In economic news today, the Australian Bureau of Statistics releases housing finance data for January, the ANZ-Roy Morgan Consumer Confidence weekly survey is out, and the National Australia Bank monthly business survey is released.
Also today Reserve Bank Assistant Governor (Financial System) Michele Bullock speaks at the Seamless Australia Payments Conference, in Sydney.
AAP
7.15: OPEC price fight weighs on oil
Oil prices fell, weighed down by concerns about a rapid rise in US crude output as cracks emerged in OPEC’s united front on output cuts.
Light, sweet crude for April delivery fell 68 cents, or 1.1 per cent, to $US61.36 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, declined 54 cents, or 0.8 per cent to $US64.95 a barrel.
A difference of opinion between members the Organization of the Petroleum Exporting Countries on the ideal price for crude oil highlighted concerns over increasing shale output and US producers’ ability to potentially crash the market.
Dow Jones
7.10am: Dow falls, Nasdaq hits record
The Nasdaq finished at another record high, but the Dow tumbled as revived worries of a trade war led to heavy selling in shares of several leading multinationals.
The tech-rich Nasdaq Composite Index rose 0.4 per cent to 7,588.32, its second straight record.
The Dow Jones Industrial Average dropped 0.6 per cent to 25,178.61, while the broadbased S&P 500 shed 0.1 per cent to 2,783.02.
Wall Street stocks opened well on continued positive momentum from last Friday’s strong jobs report, but the tone quickly shifted as investors took note of sharpening rhetoric on international trade.
European Trade Commissioner Cecilia Malmstroem said the trading bloc would “stand up to bullies” after President Donald Trump threatened to tax German cars if the European Union doesn’t lower barriers to US products.
Trump provoked the Europeans still further in a tweet saying his Commerce Secretary Wilbur Ross would speak with the EU side “about eliminating the large tariffs and barriers they use against the USA.”
Art Hogan, chief market strategist at Wunderlich Securities, said the back and forth reignited worries about a trade war that had receded somewhat after Trump indicated more flexibility on imported steel and aluminium.
“Now, when we start to hear about possible retaliation, it becomes a concern again,” Hogan said.
Boeing and Caterpillar both dropped more than two per cent, while United Technologies shed 1.9 per cent and Honeywell International 1.3 per cent. All are major exporters that could be hurt if escalating threats become reality.
Among Nasdaq companies, both Apple and Amazon gained around one per cent, while Tesla Motors jumped 5.6 per cent.
But Netflix dropped 3.1 per cent after Citron Research said the streaming company was overvalued and should be “shorted,” meaning investors should bet it will fall.
Broadcom shares jumped 3.6 per cent after a Wall Street Journal report that Intel is considering bidding for the chip company, which has undertaken a hostile campaign to buy Qualcomm. Intel fell 1.3 per cent.
Goldman Sachs gained 1.0 per cent after announcing that co-president Harvey Schwartz would retire, leaving David Solomon the sole president and next in line to become the investment bank’s next chief executive.
AFP
7.00am: Virtual currency warning
A new report warns central banks should carefully weigh the risks before introducing virtual currencies using the technology that enables bitcoin.
The report from the Bank for International Settlements, an international organisation for central banks in Basel, Switzerland, says virtual currencies issued by central banks could worsen bank runs by making it easy to move money out of the commercial banking system with a mouse click during a panic. And any digitally based currency would have to comply with requirements aimed at stopping money laundering and financing of terrorism.
The report doesn’t dismiss the idea. It said virtual currencies in some form could help make trading securities and foreign currencies more efficient. The authors call highly volatile, private virtual currencies such as bitcoin “unsafe to rely on.”
AP
6.50am: Dollar higher
The Australian dollar is slightly higher, but has lost ground late in the offshore session, as US stocks suffered a fall.
At 6.35am (AEDT), the local currency was worth US78.76 cents, up from US78.70 cents yesterday.
Wall Street stocks have fallen as worries about the metal tariffs signed into law last week by President Donald Trump weighed on industrial stocks.
AAP
6.40am: Global markets drift
Equity markets drifted lower as profit-taking cut short a rally sparked by solid US jobs data and optimism about the prospect of a US-North Korean summit meeting.
Dealers said underlying sentiment remained upbeat but many investors, lacking fresh impetus to keep buying stocks, consolidated their positions.
The US trend reversal in turn weighed on European stocks which came off their session highs towards the closing bell.
Frankfurt’s DAX index, however, outperformed its peers after energy giant E. ON announced plans to take over Innogy, the renewables subsidiary of competitor RWE, in a deal valued at around 20 billion euros.
The deal fuelled a rally of shares in the companies involved, with E. ON shares up by more than four per cent in closing trade, and RWE stock just over nine per cent higher.
Worldwide, investors were cheered by US Labor Department data that showed employers added a forecast-busting 313,000 jobs in February.
The closely-watched monthly report also revealed moderating wage growth compared with the January report, mitigating concerns the Federal Reserve will speed its pace of interest rate hikes.
London closed down 0.1 per cent, Frankfurt ended up 0.6 per cent and Paris ended flat.
AFP
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May rate cut ‘locked in’; ASX plots strong finish before Anzac Day break
Westpac's Luci Ellis predicts rate cuts in May, Aug, Nov. Miners lead local gains. Mixed Asian markets reflect Trump trade uncertainty amid softening stance on China.
ASX 200 mostly erases April tariff losses; gold miners dive
Trade deals optimism rises as US President Donald Trump softens stance on China, Fed chair Jerome Powell. Paladin top gainer. Safe-haven gold pulls back from its record high.
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