K: Financial and Insurance Services

Market backs rate cuts over fiscal stimulus

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Original article by Sarah Turner
The Australian Financial Review – Page: 9 : 4-Apr-19

The April 2019 Budget has not had much impact on monetary policy expectations, with financial markets still pricing in two interest rate cuts by August 2020. Sally Auld of JP Morgan says the Budget’s fiscal stimulus measures are unlikely to completely offset the impact of factors such as the downturn in housing prices, slowing construction activity and weak growth in real incomes. Meanwhile, economists are more bearish about the economic growth outlook than the Treasury.

CORPORATES
JP MORGAN AUSTRALIA LIMITED, AUSTRALIA. DEPT OF THE TREASURY, RBC CAPITAL MARKETS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA, AUSTRALIAN LABOR PARTY

Interest rates on hold, but cuts on the cards

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Original article by David Rogers
The Australian – Page: 47 : 3-Apr-19

The Reserve Bank of Australia has signalled that it remains open to monetary policy stimulus if economic conditions justify such action, while keeping the cash unchanged at 1.5 per cent for a 32nd consecutive month. Central bank governor Philip Lowe has also noted a slowdown in global economic growth and an increase in downside risks. Marcel Thieliant of Capital Economics expects official interest rates to be reduced in the near-term.

CORPORATES
RESERVE BANK OF AUSTRALIA, CAPITAL ECONOMICS LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Big banks miss out as nimble lenders pounce

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Original article by James Frost
The Australian Financial Review – Page: 17 : 2-Apr-19

Specialised lenders such as Scottish Pacific say their customer base is increasing due to the stricter lending standards of the major banks. Scottish Pacific CEO Peter Langham notes that many of the firm’s small business customers would traditionally have secured funding against property from a major bank. Prospa’s co-founder Beau Bertoli agrees that small businesses are finding it harder to secure financing from big banks, noting that they are scrutinising loan applications more carefully.

CORPORATES
SCOTTISH PACIFIC GROUP LIMITED – ASX SCO, PROSPA GROUP LIMITED, AUSTRALIA. OFFICE OF THE AUSTRALIAN SMALL BUSINESS AND FAMILY ENTERPRISE OMBUDSMAN, JUDO CAPITAL PTY LTD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Economists see rates on hold this year

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Original article by Sarah Turner, Vesna Poljak, William McInnes
The Australian Financial Review – Page: 14 & 21 : 1-Apr-19

The latest quarterly survey of economists shows that the general consensus is that the Reserve Bank of Australia will leave official interest rates unchanged at 1.5 per cent for the remainder of 2019. The previous quarterly survey had shown that respondents expected rates to rise to 1.75 by the end of 2019. Meanwhile, the median forecast for the unemployment rate is 5 per cent by mid-2019, compared with a median forecast of 5.20 per cent in the previous survey. Expectations for underlying inflation in mid-2019 have also been pegged back, from 2.10 per cent in the January survey to 1.80 per cent.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NOMURA AUSTRALIA LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, HSBC AUSTRALIA HOLDINGS PTY LTD, BANK OF AMERICA AUSTRALIA LIMITED, MERRILL LYNCH (AUSTRALIA) PTY LTD, MACQUARIE GROUP LIMITED – ASX MQG, CITIGROUP PTY LTD, LAMINAR CAPITAL PTY LTD, DEUTSCHE BANK AG, JP MORGAN AUSTRALIA LIMITED

Ten-year bond yields plumb new depths

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Original article by Vesna Poljak
The Australian Financial Review – Page: 31 : 29-Mar-19

The global bond rally has seen the yield on Australian 10-year bonds fall to a record low of 1.73 per cent, to the same level as New Zealand’s 10-year bonds. However, NZ currently has a higher official interest rate at 1.75 per cent, although futures traders have priced in two rate cuts in Australia by August 2020, which would reduce the cash rate to one per cent. Annette Beacher of TD Securities has not ruled out a further fall in bond yields.

CORPORATES
TD SECURITIES, RESERVE BANK OF AUSTRALIA, RESERVE BANK OF NEW ZEALAND, EUROPEAN CENTRAL BANK, UNITED STATES. FEDERAL RESERVE BOARD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Citi slaps 6500 target on ASX 200 by year’s end

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Original article by David Rogers
The Australian – Page: 27 : 29-Mar-19

Citigroup is bullish about the outlook for the S&P/ASX 200, forecasting that it will end 2019 at 6,500 points and reach 6,650 points by mid-2020. The benchmark index has gained 9.4 per cent so far in the first quarter of 2019, following a nine per cent decline in the December 2018 quarter. Citigroup is particularly upbeat about the resources sector. Meanwhile, Andrew Garthwaite of Credit Suisse has upgraded his recommendation on resources stocks from ‘neutral’ to ‘overweight’.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, CITIGROUP PTY LTD, CREDIT SUISSE (AUSTRALIA) LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

‘Obey the law’: banks rebuked

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Original article by James Frost, John Kehoe, Vesna Poljak
The Australian Financial Review – Page: 1 & 2 : 28-Mar-19

ANZ Bank CEO Shayne Elliott and National Australia Bank chairman Phil Chronican fronted the House of Representative economics committee on 27 March. They argued that greater enforcement of responsible lending laws has contributed to a credit squeeze for home buyers and small businesses. However, Australian Securities & Investments Commission chairman James Shipton rejects such claims, noting that banks have been subject to the responsible lending laws since 2009. ASIC’s deputy chairman Daniel Crennan in turn says banks face an increase in civil and criminal breaches of the law, and he has urged them to co-operate with the corporate regulator.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. HOUSE OF REPRESENTATIVES STANDING COMMITTEE ON ECONOMICS, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, JUDO CAPITAL PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC, MLC LIMITED, NULIS NOMINEES (AUSTRALIA) LIMITED, RESERVE BANK OF AUSTRALIA

US economy facing headwinds: Fed

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Original article by Eric Johnston
The Australian – Page: 17 & 28 : 26-Mar-19

Federal Reserve Bank of Chicago president Charles Evans forecasts that US economic growth in 2019 will be within the range of 1.75 per cent to two per cent. Meanwhile, financial markets have priced in a 60 per cent chance that the US Federal Reserve will reduce official interest rates, but Evans expects rates to rise, although not until the second half of 2020. Evans has also downplayed the risk to the US economy and financial markets if Britain’s exit from the European Union is "disorderly".

CORPORATES
FEDERAL RESERVE BANK OF CHICAGO, UNITED STATES. FEDERAL RESERVE BOARD, STANDARD AND POOR’S ASX 200 INDEX, NIKKEI 225 INDEX, CREDIT SUISSE AG

NAB kills off scandal-plagued mortgage referral program

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Original article by James Frost
The Australian Financial Review – Page: 13 & 16 : 26-Mar-19

National Australia Bank has advised that it will end its controversial ‘loan introducer’ program from 1 October. The program sees non-bank employees receive a fee for referring home loan clients, with NAB stating in 2018 that it generates one out of every 20 mortgages written by the bank. NAB also says the program has generated around $2.4 billion worth of home loans, and that around $100 million in referral fees have been paid. Interim CEO and chairman-elect Philip Chronican says he wants customers to come to NAB because of its products and services, not because a third party receives a fee for endorsing it.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, KPMG AUSTRALIA PTY LTD, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE

Shares hit by fresh global growth fears

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Original article by David Rogers
The Australian – Page: 17 & 28 : 26-Mar-19

The bearish sentiment that saw the S&P/ASX 200 fall to a three-month low on 25 March also weighed on the local bond market, with the yield on Australian 10-year bonds reaching a record low of 1.756 per cent. Growing concern about the outlook for the global economy also prompted a decline in the yield on US government bonds, with the yield curve inverting for the first time since 2007. Meanwhile, the Australian dollar reached an low of $US0.7066 in local trading, and Steven Miller Grant Samuel Funds Management expects it to fall further.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, GRANT SAMUEL FUNDS MANAGEMENT PTY LTD, UNITED STATES. FEDERAL RESERVE BOARD, FEDERAL RESERVE BANK OF CHICAGO