Tag: National Australia Bank
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.
- 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.
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.
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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.
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.
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.
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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.
- 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.
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.
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.
“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.