Non-banks clamp down on new loans

Original article by Joyce Moullakis
The Australian – Page: 13 & 14 : 6-Apr-20

Non-bank lender Pepper Australia has increased its home loan interest rates and tightened its credit criteria as it assesses the impact of the coronavirus on its operations. Pepper will stop offering construction loans and will require a bigger deposit for commercial loans, while larger deposits will also be needed for its two types of home loans. Fellow non-bank lender Bluestone has also introduced new credit criteria as well as increasing the rates on all of its loan products by 35 basis points.

CORPORATES
PEPPER AUSTRALIA PTY LTD, BLUESTONE GROUP PTY LTD

$105b bridge across the chasm

Original article by Matthew Cranston, James Eyers, James Frost, Jonathan Shapiro
The Australian Financial Review – Page: 1 & 4 : 20-Mar-20

Reserve Bank of Australia governor Philip Lowe has warned that the cash rate is likely to remain at the new record low of 0.25 per cent for three years. The emergency interest rate cut on 19 March is the RBA’s first out-of-cycle move since 1997; it has coincided with the announcement of a government bond-buying program which aims to ensure that the benchmark three-year bond yield remains at around 0.25 per cent. Lowe says there will be no limit to the bond-buying program. The RBA has also announced a $90bn line of credit for banks to provide low-interest loans to small and medium enterprises; the federal government will provide an additional $15bn to small lenders to help with their funding.

CORPORATES
RESERVE BANK OF AUSTRALIA

Economic dose of medicine

Original article by Patrick Commins
The Australian Financial Review – Page: 1 & 4 : 17-Mar-20

The Reserve Bank of Australia is set to make an emergency interest rate cut in response to the coronavirus pandemic. RBA governor Philip Lowe has also flagged a government bond purchasing program to ensure that financial markets continue to function smoothly. The central bank injected some $5.9bn into the banking system on 16 March in order to boost liquidity. The US Federal Reserve and the Reserve Bank of New Zealand announced out-of-cycle interest rate cuts on 16 March; US rates have been reduced to near zero and NZ rates have been slashed by 75 basis points to just 0.25 per cent.

CORPORATES
RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF NEW ZEALAND

RBA may need $30b in bonds for a shot at QE, says Deutsche Bank

Original article by Matthew Cranston
The Australian Financial Review – Page: 4 : 10-Mar-20

Deutsche Bank economist Phil O’Donaghoe does not expect quantitative easing to be necessary in response to the coronavirus. He says another official interest rate cut in April and the federal government’s stimulus package should result in a 2019-20 Budget deficit of about 1.2 per cent of GDP. However, O’Donaghoe warns that if the Reserve Bank of Australia does resort to quantitative easing, it would need to purchase up to $30bn worth of bonds to generate the same macroeconomic stimulus as a rate cut of 25 basis points.

CORPORATES
RESERVE BANK OF AUSTRALIA, DEUTSCHE BANK AG

World hunkers down for fight against virus

Original article by David Rogers
The Australian – Page: 29 : 6-Mar-20

Investors have responded positively to the announcement of economic stimulus measures in Australia and the US in response to the coronavirus. Wall Street and sharemarkets across the Asia-Pacific region rallied on 5 March, while the yield on 10-year Australian government bonds rose six basis points to 0.78 per cent. Meanwhile, financial markets expect further official interest rate cuts in both Australia and the US in coming months.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, STANDARD AND POOR’S 500 INDEX, SHANGHAI COMPOSITE INDEX, NIKKEI 225 INDEX, HANG SENG INDEX, KOSPI INDEX, TAIEX INDEX

Analysts cut bank earnings forecasts

Original article by Gerard Cockburn, Joyce Moullakis
The Australian – Page: 21 : 5-Mar-20

JP Morgan expects the net profits of Australia’s major banks to fall by 3-4 per cent over coming years after they moved to reduce their mortgage interest rates by 25 basis points, in line with the latest official interest rate cut. JP Morgan adds that the prospect of lower profit margins may prompt banks to reduce their dividend payouts. Macquarie has reiterated its ‘underweight’ recommendation on the banking sector, while UBS has downgraded its earnings-per-share forecast for bank stocks.

CORPORATES
JP MORGAN AUSTRALIA LIMITED, MACQUARIE GROUP LIMITED – ASX MQG, UBS HOLDINGS PTY LTD

Lower rates won’t help: AFIC boss

Original article by Cliona O’Dowd
The Australian – Page: 17 & 28 : 3-Mar-20

The Australian Financial Investment Company’s MD Mark Freeman argues that official interest rates are already at a historically low level, so further monetary policy easing is unlikely to stimulate the economy or stabilise financial markets. The Reserve Bank is widely tipped to reduce the cash rate on 3 March, and there is growing speculation that it could pursue quantitative easing later in the year. However, Freeman has questioned the merits of quantitative easing. He adds that the sharemarket’s recent pullback has created some good buying opportunities.

CORPORATES
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED – ASX AFI, RESERVE BANK OF AUSTRALIA

$A catches coronavirus, plummets to 11-year low

Original article by Tom Richardson
The Australian Financial Review – Page: 27 : 3-Mar-20

The Australian dollar reached a low of $US0.654 in local trading on 2 March, ahead of the Reserve Bank of Australia’s monthly board meeting. Financial markets have priced in a near-97 per cent chance that the central bank will reduce the cash rate on 3 March, and a 67 per cent chance of a second rate cut in May. Morgan Stanley expects the cash rate to remain on hold until April, giving the RBA time to assess GDP data to be released on 4 March. The Commonwealth Bank says the economic impact of the coronavirus could prompt the Australian dollar to fall further in coming days.

CORPORATES
RESERVE BANK OF AUSTRALIA, MORGAN STANLEY AUSTRALIA LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Rate cut tipped amid virus crisis

Original article by Richard Gluyas
The Australian – Page: 17 & 20 : 2-Mar-20

Financial markets have now priced in an 87 per cent chance that the Reserve Bank of Australia will reduce the cash rate on 3 March. This compares with an 18 per cent chance on 28 February. The case for further easing of monetary has been strengthened by the local sharemarket’s 9.8 per fall in the last week of February, amid global bearish sentiment as the coronavirus outbreak continued to spread beyond China. Shane Oliver of AMP Capital says the RBA would probably have preferred to wait a bit longer to act. Federal Reserve chairman Jerome Powell has also flagged the possibility of interest rate cuts to stimulate the US economy.

CORPORATES
RESERVE BANK OF AUSTRALIA, AMP CAPITAL INVESTORS LIMITED, UNITED STATES. FEDERAL RESERVE BOARD

Markets hit fresh record high

Original article by David Rogers
The Australian – Page: 17 & 26 : 21-Feb-20

The Australian sharemarket has gained 7.2 per cent so far in 2020, with the benchmark S&P/ASX 200 reaching a new intra-day high of 7,197.2 points on 20 February. The rally saw a number of blue-chip stocks rise to new highs. Meanwhile, the Australian dollar fell to its lowest level in more than a decade in response to data showing that the unemployment rate rose to 5.3 per cent in January. This in turn heightened market expectations of an official interest rate cut by August.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, RESERVE BANK OF AUSTRALIA