K62 Finance

Mortgage rate hikes pressure income

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Original article by Michael Roddan
The Australian – Page: 24 : 14-Jun-17

Data from RateCity shows that Australian mortgage interest rates for investors and borrowers with interest-only loans have generally risen by about 56 basis points in the last two months. Lenders have increased home loan interest rates seven times in the last two years, with rates for interest-only loans rising more quickly than those for owner-occupiers as lenders seek to shift customers from interest-only loans to principal-and-interest products. Martin Crabb of Shaw & Partners notes that a rise in home loan repayments is having an adverse impact on the level of household savings.

CORPORATES
RATECITY PTY LTD, SHAW AND PARTNERS LIMITED, RESERVE BANK OF AUSTRALIA

All eyes on Fed’s expected interest rate rise

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Original article by John Kehoe
The Australian Financial Review – Page: 27 : 13-Jun-17

Financial market pricing indicates that the US Federal Reserve is almost certain to increase official interest rates in June 2017. Data showing that the US unemployment rate fell to a 16-year low in May will strengthen the case for a rate rise. Meanwhile, market watchers will be seeking guidance from the central bank on its plans to reduce its balance sheet, which has risen to $US4.5trn as a result of quantitative easing measures.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, THE GOLDMAN SACHS GROUP INCORPORATED, CITIBANK LIMITED, NASDAQ COMPOSITE INDEX, FACEBOOK INCORPORATED, AMAZON.COM INCORPORATED, APPLE INCORPORATED, ALPHABET INCORPORATED, GOOGLE INCORPORATED, NETFLIX INCORPORATED, CME GROUP INCORPORATED, RBC CAPITAL MARKETS

Outlook ‘tough’ as economy slows

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Original article by David Rogers
The Australian – Page: 17 & 27 : 8-Jun-17

Data from Credit Suisse shows that financial markets expect the cash rate to remain on hold in the next 12 months, following the release of the latest GDP data. The economy expanded by just 0.3 per cent in the March 2017 quarter, and year-on-year growth fell to an eight-year low of 1.7 per cent. The data will cast doubt on the Reserve Bank’s forecast of calendar year economic growth of 2.5-3.5 per cent. The Commonwealth Bank notes that the central bank will be adverse to easing the cash rate, as doing so could further inflate house prices.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, ROYAL BANK OF CANADA, GOLDMAN SACHS AUSTRALIA PTY LTD, WESFARMERS LIMITED – ASX WES, TELSTRA CORPORATION LIMITED – ASX TLS, TOLL HOLDINGS LIMITED, GOODMAN GROUP – ASX GMG

Reserve takes hands off the growth lever

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Original article by David Rogers
The Australian – Page: 19 & 28 : 7-Jun-17

The Reserve Bank of Australia’s monetary policy statement for June 2017 notes that GDP growth is likely to have slowed in the March 2017 quarter. Paul Dales of Capital Economics says that while the central bank may be willing to overlook a temporary fall in GDP, a second successive quarter of weak GDP growth in June would be a concern for it. Dales expects the RBA to leave official interest rates unchanged at 1.5 per cent for the rest of 2017, after doing so in June.

CORPORATES
RESERVE BANK OF AUSTRALIA, CAPITAL ECONOMICS LIMITED, CITIGROUP PTY LTD, BARCLAYS BANK PLC, ABERDEEN ASSET MANAGEMENT LIMITED

Offshore bank investors fret over housing: Elliott

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Original article by James Eyers
The Australian Financial Review – Page: 8 : 2-Jun-17

ANZ Bank CEO Shayne Elliott says UK investors with stakes in Australian banks are worried that recent regulatory changes to housing policy in Australia may lead to a market correction. Elliott, who was speaking at a G100 conference in Sydney, also said that comments by Federal Treasurer Scott Morrison that Australia’s large banks are "an oligopoly" were unhelpful, noting that there are other sectors in Australia that are just as concentrated as banking.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIA. DEPT OF THE TREASURY

Fed expects to raise short-term rates soon

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Original article by Nick Timiraos
The Australian – Page: 30 : 26-May-17

Speculation that the US Federal Reserve will increase interest rates in June 2017 has gathered pace following the release of the minutes from its policy meeting for May. The minutes show that a majority of board members feel that the economic outlook may soon justify an increase in short-term interest rates. Futures traders now consider the chances of a rate rise in June to be about 80 per cent. Meanwhile, the central bank has issued a staff briefing which looks at options for reducing its balance sheet, which has risen to $US4.5trn as a result of quantitative easing.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, DOW JONES INDUSTRIAL AVERAGE INDEX

China ratings cut hits markets

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Original article by Rowan Callick, Andrew White
The Australian – Page: 19 & 30 : 25-May-17

The Australian dollar fell sharply on 24 May 2017 in response to Moody’s Investors Service’s decision to downgrade China’s debt rating from "Aa3" to "A1". The Shanghai and Shenzhen sharemarkets also lost ground during intra-day trading. Moody’s has forecast that China’s economic growth potential will fall to around five per cent in the next five years, while it expects debt across the Chinese economy to continue to rise.

CORPORATES
MOODY’S INVESTORS SERVICE INCORPORATED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIA. DEPT OF THE TREASURY, STOCKBROKERS AND FINANCIAL ADVISERS ASSOCIATION LIMITED, STANDARD AND POOR’S FINANCIAL SERVICES LLC, COMMUNIST PARTY (CHINA)

Westpac eyes business lending to fill the gap

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Original article by James Eyers, James Frost
The Australian Financial Review – Page: 11 & 15 : 9-May-17

Westpac issued its 2016-17 interim financial results on 8 May 2017, recording a cash profit of $A4.02 billion, up three per cent on the previous corresponding period. Business credit and housing credit grew by 3.4 per cent and 6.5 per cent respectively, while cash earnings from its business bank increased by one per cent. Cash earnings from its BT Financial wealth unit declined by 11 per cent, while its interim dividend remained unchanged.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, BT FINANCIAL GROUP PTY LTD, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, RESERVE BANK OF AUSTRALIA, CITIGROUP PTY LTD, PRICEWATERHOUSECOOPERS AUSTRALIA (INTERNATIONAL) PTY LTD

NAB downplays ‘inevitable’ AAA rating loss

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Original article by Michael Roddan
The Australian – Page: 23 : 5-May-17

National Australia Bank has conceded that the loss of Australia’s coveted triple-A credit rating would result in a corresponding downgrade of the bank’s credit rating. However, group treasurer Shaun Dooley says this would have no impact on the bank’s domestic funding costs, while the cost of international funding would rise by about 10 basis points. Dooley adds that international investors have indicated that they would continue to invest in Australian banks if the nation’s credit rating were downgraded.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, MOODY’S INVESTORS SERVICE INCORPORATED, STANDARD AND POOR’S FINANCIAL SERVICES LLC, FITCH RATINGS LIMITED, AUSTRALIA. DEPT OF THE TREASURY, DELOITTE ACCESS ECONOMICS PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF AUSTRALIA

ANZ shares pummelled by ‘lower for longer’ outlook

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Original article by Richard Gluyas
The Australian – Page: 19 & 23 : 3-May-17

The ANZ Bank has posted a 2016-17 interim cash profit of $A3.4bn, which is 23 per cent higher than previously. However, most analysts had expected a half-year profit of between $A3.5bn and $A3.8bn. CEO Shayne Elliott is confident that ANZ can outperform its rivals in terms of profit growth, but he says the low-growth environment means it no longer expects revenue growth to outpace that of rival banks. Shareholders will receive an interim dividend of $A0.80 per share.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, MACQUARIE RESEARCH EQUITIES, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, RESERVE BANK OF AUSTRALIA