Tag: National Australia Bank


Australian shares plunge again as businesses shut and US Congress bickers over coronavirus stimulus


Australia

Australian shares have lost nearly $100 billion in a day of volatile trade after the country shut down parts of its economy and more states shut their borders.

Key points:

  • The ASX 200 lost further value, putting it back to where it was in late November 2012
  • The Australian dollar is trading at a near 17-year low
  • Global rating agency Standard & Poor’s predicts Australia’s economy will expand by just 0.4 per cent in 2020

Investors were also unnerved by the failure of the US Congress to pass the latest coronavirus stimulus bill, which saw US stock futures plunge 5 per cent at the open, the biggest permissible fall.

The ASX 200 index came off earlier lows to be down by 5.6 per cent or 271 points to 4,546 at the close, with most sectors in the red led by banks and consumer stocks.

The benchmark index is back to where it was in late November 2012.

The All Ordinaries index slumped 6 per cent to 4,564.

The Australian dollar is trading at a near 17-year low against the greenback of around 57.63 US cents.

Coronavirus update: Follow all the latest news in our daily wrap

Another fall in oil prices saw the ASX 200 energy index lose as much as 9 per cent during the session, to the lowest since early 2004, as more companies cut their spending and delayed projects.

It comes amid a slump in demand for fuel due to coronavirus, and as governments globally closed borders and shutdown their economies.

The Nikkei 225 index in Japan has gained 2 per cent after the Bank of Japan said it would inject an extra 800 billion yen ($12.7 billion) into the financial system of the world’s third-largest economy.

In China, the Shanghai Composite and the Hang Seng index in Hong Kong were both in the red in afternoon trade.

Stay up-to-date on the coronavirus outbreak

Swimwear company Tigerlily goes into administration

Fashion and swimwear brand Tigerlily became the latest retailer to go into voluntary administration.

Administrator KordaMentha said the decision to go into administration was made after considering the impact of the coronavirus.

Tigerlily employs 200 people and some shops will stay open as the administrators look for a buyer.

The firm was founded by former model and businesswoman Jodhi Meares, a former wife of billionaire James Packer.

The first meeting of creditors will be on April 1.

Reserve Bank plans further bond purchases

The Reserve Bank said it planned to buy another $4 billion in government bonds.

That follows a $5 billion purchase of bonds on Friday in its biggest intervention in Australia’s financial system in history.

The banking regulator, the Australian Prudential Regulation Authority, will soon announce plans to reduce the regulatory burden faced by financial institutions in the wake of the coronavirus.

The news comes a little over a year since the final report of the banking royal commission was released, which clamped down on bad behaviour by financial institutions.

What the second stimulus package will mean for you
A suite of new measures have been unveiled to soften the economic blow dealt by coronavirus. But what do they mean for your wallet?

APRA said lenders needed to put aside more money to cover losses caused by allowing customers to defer loan repayments.

The Council for Financial Regulators said it had discussed the need for continued “close engagement” and contingency plans with international regulators.

CMC Markets chief markets strategist for Asia Pacific, Michael McCarthy, said investors were increasingly pessimistic about the economic outlook and were expecting a recession globally and in Australia, especially as the US Senate failed to advance a coronavirus stimulus bill.

“The lack of political will in a crisis is really disappointing investors,” he said.

However, negotiations are ongoing, and US President Donald Trump said Congress was close to reaching an agreement.

On the local market, banks and industrial stocks led the falls.

The big banks plunged to multi-year lows, with National Australia Bank back at levels not seen since 1996 at one point this morning.

Coronavirus questions answered
Breaking down the latest news and research to understand how the world is living through an epidemic, this is the ABC’s Coronacast.

Buy now, pay later firm Afterpay lost nearly one third of its value, down $3.50 to $8.90.

Financial company Challenger dropped by more than one fifth to $2.97 after the Federal Government said people in financial difficulty because of the coronavirus could access their superannuation early.

And retail firms like Premier Investments also took a hit; its shares lost one quarter of their value to $8.95.

Flight Centre brought forward plans to close 100 underperforming stores and its senior executives will take a 50 per cent pay cut.

US stocks futures fell by nearly 4 per cent in opening trade in Asia, suggesting another fall on Wall Street tonight.

In New Zealand, the benchmark NZ50 index lost 7.6 per cent to 8,498 after the country’s government announced a shutdown to try and stop the spread of the coronavirus.

Global credit-ratings agency Standard & Poor’s (S&P) estimated total and permanent losses in Asia because of the coronavirus stood at $US620 billion ($1.08 trillion) for governments, companies, banks and households.

Last week it said the global economy was already in recession.

S&P predicted Australia’s economy would expand by just 0.4 per cent in 2020 after growth of 2.2 per cent last year seasonally adjusted according to the Bureau of Statistics.

It said China’s growth rate could halve this year to 2.9 per cent.

The agency forecasted the Hong Kong, Singaporean, South Korean and Japanese economies would go backwards in 2020.

Your questions on coronavirus answered:


Video: Q+A: Coronavirus testing criteria slammed

(ABC News)

ABC/Reuters

Source: https://www.abc.net.au/news


We’re officially in a bear market and your superannuation is on the line


Australia

The wave of selling taking place on the share market right now seems unrelenting.

It’s been so strong that the benchmark ASX200 index and the All Ordinaries index are now both in what’s known as “bear market” territory.

That means top-to-bottom losses of at least 20 per cent. In dollar terms, we’ve seen hundreds of billions of dollars wiped off the market every week.

The reasons for the stock market plunge are well-known.

Coronavirus questions answered
Breaking down the latest news and research to understand how the world is living through an epidemic, this is the ABC’s Coronacast.

There are fears the outbreak of the coronavirus will cripple the global economy, send many firms to the wall and leave many Australians unemployed. Add to that an oil price shock and you have the makings of a financial crisis.

The run on toilet paper captures the panic mindset that we’ve also seen in financial markets.

Apart from looking into the bathroom cupboard and finding you’ve run out of toilet paper, how does the financial and economic environment we’re in now actually affect you as an individual?

Share market gains and losses

Most younger Australians have time on their side. That’s a big advantage when it comes to investing.

As you can see from this chart, there’s a truism when it comes to investing in the share market: the market always rises over the long run.


Infographic:
In the long run, the market always rises.
(Supplied: CMC Markets Stockbroking)

So, if you’re a worker with superannuation, history suggests that over the next few decades your balance will return to what it was late last year and then keep growing again.

For those in or approaching retirement, it’s a nervous time.

It’s important to note that share prices are coming down from all-time highs. So, while the market is down over 20 per cent, it’s still well above where it was back in 2012.

That said, if you have hundreds of thousands of dollars in your nest egg, your wealth will have been cut in the past couple of months, and the time at which you shift to the Age Pension, assuming share markets don’t immediately recover, has been brought forward.

Rate cuts can’t cure COVID-19
Reserve Bank interest rate cuts will do little to keep Australia out of a deep recession if coronavirus becomes a severe pandemic, but there are some unconventional policies that could help save the economy.

However, if you sell now, financial advisors say, you are crystallising your losses.

It all depends on whether you need cash now. Some retirees who run their own self-managed super funds have told the ABC they have sold a few shares just to make sure they have some cash, or income, for the next six months.

The jobs market

However, the share market doesn’t operate in isolation.

The market itself is reflecting a material or serious deterioration (of profitability) in Australian businesses, big and small.

For some, with mountains of debt, as cash flow dries up (as people spend less), many businesses may go to the wall. The only option for many companies will be to make certain positions redundant.

Losing your job in a downturn can be both a psychologically shocking experience and a traumatic event.

Once you’ve recovered from that, though, the overwhelming advice is to keep applying for jobs, consider trying your hand at a new career where there’s more demand for workers, and re-skilling or resuming your studies.

Economists say the shock and recovery process of an economic downturn creates new industries and jobs. Anticipating where these new opportunities might be, they say, is crucial for job seekers.

Save or spend?

Can Morrison match Rudd in keeping Australia out of recession in a global crisis?
Amid the threat of coronavirus, Scott Morrison’s Government needs to keep growth going, spending enough — not too much, not too little — and choosing the right measures.

Deutsche Bank, AMP Capital, the National Australia Bank, BIS Oxford Economics and Bloomberg Economics all say Australia will enter recession in 2020 or experience a major economic shock.

The majority of Australia’s economic growth is generated by shoppers spending at the stores. Naturally, the government wants employers to keep employees on the payroll so they can keep spending.

That’s easier said than done. Why? Because it’s only natural to want to protect your own wealth.

Or, as chief economist of RBC Capital Markets Su-Lin Ong puts it:

“As much as the Prime Minister and others like to downplay some of that to a degree, I think the reality is that for both households and businesses, the underlying fundamentals will be quite weak and that needs to be taken into account when thinking about expenditure and borrowing.”

Getting by day-to-day

The pictures of toiler paper runs have also shocked, saddened and angered many Australians.

Of course, it’s upsetting to see shoppers fighting with one another to secure dunny paper.

The psychology behind it is similar to a bank run.

The reality is that even if a bank is in sound financial health, if a mistruth is spread that it’s not, public panic can develop and everyone rushes to take their money out of the bank.

While the coronavirus will knock out many business supply chains, Australia, for a start, is currently well-stocked for groceries and the ability to make those groceries.

As a spokesperson for Woolworths, Australia’s biggest supermarket supply chain, recently put it:

How will businesses cope?
Businesses are struggling with questions such as who will pay workers forced to self-isolate in a coronavirus outbreak.

“Our teams are continuing to work hard on restocking stores with long-life food and groceries from our distribution centres.”

“The vast majority of the products in our range remain available for our customers as normal.”

In the space of little over a month, Woolworths’ share price on the ASX has effectively crashed, down 20 per cent.

This means Woolworths, as a corporation, has a reduced capacity to raise funds (extra cash or finance). Put simply, it’s technically harder for it to grow its business. It does not, however, prevent the grocery chain from re-stocking its shelves with loo paper.

A time for calm

Economies grow and retract, as do share markets.

The coronavirus has a finite life, but the damage it does to the share market and the economy will take time to work through.

The hope in the meantime is that we don’t exacerbate the problems by misunderstanding or overestimating how they will ultimately affect us.


Video: Will the coronavirus push Australia into recession? Alan Kohler takes a look

(7.30)

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Source: https://www.abc.net.au/news


House prices finish 2019 on a high, as Sydney and Melbourne lead gains nationally


Australia

House prices in most Australian cities finished 2019 on a high, with national average dwelling prices lifting 1.1 per cent during December and by 2.3 per cent over the year, according to CoreLogic.

For the three-month period to December, national average house prices soared by 4 per cent — the fastest rate of national dwelling value growth over any three-month period since November 2009.

Key points:

  • Australian home prices rose an average of 1.1 per cent last month, with Sydney (1.7 per cent) and Melbourne (1.4 per cent) leading the gains
  • Although the monthly capital gains trend remained fast-paced, the 1.1 per cent rise in December was softer relative to the 1.7 per cent gain in November
  • Nationally, house prices are still off their previous record highs in all capitals except Hobart and Canberra

On an annual basis, five of eight capital cities, and five of the seven “rest-of-state” regions, ended the year with price rises.

Among the capitals, Sydney and Melbourne recorded the highest annual capital gain, with both cities posting a 5.3 per cent rise in dwelling values over the year.

During December, Sydney house prices rose 1.7 per cent, while Melbourne house prices shot up 1.4 per cent.

CoreLogic’s head of research, Tim Lawless, said that although the monthly capital gains trend remained fast-paced, the 1.1 per cent rise in December was softer relative to the 1.7 per cent gain in November and the 1.2 per cent rise in October.

“This would suggest that the pace of capital gains may have been dampened by higher advertised stock levels or worsening affordability pressures through early summer,” he said.

Mr Lawless said if the current quarterly rate of growth persisted this year, the national housing market would record a nominal recovery in March as dwelling values rose to new record highs.

“A nominal recovery in housing values implies home owners are becoming wealthier, which may also help to support household spending,” he said.

“However, the flipside is that housing affordability is set to deteriorate even further as dwelling values outpace growth in household incomes, signalling a setback for those saving for a deposit.”

If the strong gains continue, Sydney median house prices could shoot back up over the $1 million mark.

The data shows the typical Sydney free-standing home was worth $973,664 at the end of December, while the median Sydney unit was worth $746,017.

The typical Melbourne free-standing home was worth $778,649 at the end of December, while the median Melbourne unit was worth $576,475.

Monthly rise

(all dwellings)

Annual rise

(all dwellings)

Home

(median price)

Unit

(median price)

Sydney1.7%5.3%$973,664$746,017Melbourne1.4%5.3%$778,649$576,475Brisbane0.7%0.3%$546,781$386,023Adelaide0.5%-0.2%$471,419$323,662Perth0.0%-6.8%$456,289$352,099Hobart0.2%3.9%$506,395$393,399Darwin-0.5%-9.7%$464,625$279,357Canberra0.1%3.1%$691,551$439,496National1.1%2.3%$552,196$511,111Darwin only region to record falls for the month

Across the other capital cities, Brisbane rose 0.7 per cent for the month and 0.3 per cent for the 2019 year.

Adelaide was up 0.5 per cent for the month but fell 0.2 per cent for the year.

Are real estate agents underquoting?
Properties in Melbourne and Sydney are selling for $100,000 to $200,000 above the advertised price.

Perth values were unchanged for the month and 6.8 per cent lower for the year.

Hobart lifted 0.2 per cent for the month, and 3.9 per cent for the year.

Darwin was the only region among the capital cities and “rest-of-state” areas to record a fall in values over the month, with a 0.5 per cent decline. And Darwin house prices dropped 9.7 per cent over the year.

Canberra prices rose 0.1 per cent for the month and 3.1 per cent for the year.

For the three months to December, the best performing capital city was Sydney, which lifted 6.2 per cent, and the weakest performing capital city was Darwin, which dropped 1.4 per cent.

However, Darwin had the highest rental yield for the three-month period at 5.9 per cent, and Sydney had the lowest rental yield at 3 per cent.

CommSec chief economist Craig James said Sydney home prices were up 66.7 per cent over the decade and Melbourne prices lifted 53.5 per cent over the decade.

“Wealth is at record highs and incomes are still running faster than consumer prices,” he said.

“The missing ingredient is confidence with many Aussies preferring to save and live more simply rather than spend and add to the mountain of possessions,” Mr James said.

A year of highs and lows

Mr Lawless said the positive year-end results masked a year of two distinct halves.

“We saw capital city dwelling values fall by 3.8 per cent over the first six months of 2019, and then rebound by 7 per cent over the second half of the year,” he said.

“The housing value rebound was spurred on by lower mortgage rates, a relaxation in borrower serviceability assessments, improved housing affordability and renewed certainty around property taxation policies post the federal election,” he said.

Australia’s house of cards
Australia’s housing downturn appears to be over … for now. But huge household debts leave the nation vulnerable to a shock.

“Lower advertised stock levels persisted, providing additional upwards pressure on prices amidst rising buyer activity.”

Despite a strong rebound over the second half of 2019, Mr Lawless said, property values across most regions of Australia were still below their previous record highs.

Nationally, the CoreLogic index recorded a peak in October 2017.

The only regions where housing values were currently tracking at new record highs were Hobart, Canberra and regional Tasmania.

Tapas Strickland, a director of economics and markets at National Australia Bank, said the national gains meant prices were now 3.1 per cent below the all-time high reached in 2017, with Melbourne 2.3 per cent below its peak and Sydney 6.4 per cent away from its high.

“Assuming price growth remains solid into 2020, then house prices are set to exceed their prior peaks by early to mid-2020,” he said.

Mr Strickland said NAB expected the Reserve Bank to cut interest rates again February and June from its current rate of 0.75 per cent, and that this was likely to support house prices in 2020.

But he said higher prices were yet to translate into an improved construction outlook, given building approvals were currently down 18.2 per cent year on year, and financing conditions for property developers remained tight.

“At the same time, population growth continues to be strong, which will support underlying demand for housing into 2020 and also lead to tighter housing market conditions,” he said.

Source: https://www.abc.net.au/news