Financial Inquiry pushes ASX to 4-month high: Aus shares 1.9% higher at noon

Market Reports

by Jessica Amir

Just minutes after market open, after digesting the Hayne Banking Royal Commission final reported which was handed down yesterday, Banks and AMP shares strongly rallied, leading ASX higher with the S&P/ASX 200 index hitting a new four-month high.

At noon the index was 111 points higher or 1.9 per cent higher at 6,002 points. On the futures market the SPI is 107 points higher.

The Financial sector is leading the rally and is 4.6 per cent higher.

AMP (ASX:AMP) Chairman David Murray responded to the report saying the proposed regulatory changes will require a serious and determined effort to implement but, with industry support, it ‘should deliver better outcomes for customers’. Shares in AMP (ASX:AMP) are trading 9.3 per cent higher at $2.42 at noon. Year to date its shares are trading 0.2 per cent lower.

Westpac (ASX:WBC) is up 6.6 per cent,
CBA (ASX:CBA) is up 4.7 per cent,
ANZ (ASX:ANZ) shares are up 6.2 per cent
NAB (ASX:NAB) shares are up 4.7 per cent

Materials are following financials and the Materials sector is 1.4 per cent higher, with the iron ore price trading above US$85.00 and Fortescue Metals (ASX:FMG) shares hitting  two-year highs, gaining 4.5 per cent, on the back of the Vale’s dam collapse.

Royal Commission final report 

  • The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, 951-page final report by Kenneth Hayne, handed down 76 recommendations.
  • Some of the key takeaways, include a crackdown on commissions, with no borrower or the lender to pay a fee for home loans. Commissioner Hayne also recommended ASIC should consider reducing insurance commissions ‘ultimately’ to zero. Which explains why we are seeing loan providers shares fall sharply
  • The report also highlighted civil and criminal referrals to APRA and ASIC.
  • ASIC has responded to the report, noting, ‘the serious matters referred by the Royal Commission of possible breaches of financial services laws’. ASIC says it will prioritise addressing these matters.
  • ASIC’s Chair James Shipton says, ASIC will consider the final report and will work with ‘Parliament, the Government, APRA and other regulators to implement the reform agenda to ensure a fair, strong and efficient financial system for all Australians’.
  • ASIC will release an update in the coming weeks, outlining the actions ASIC has already taken and the further steps to strengthen its governance, culture and practices, and realign its enforcement and regulatory priorities. 
  • Meantime, the Australian Banking Association (ABA) says, Australians deserve better from the banking system and the industry has formed a Taskforce to begin to drive change and earn trust from the Australian people again. ABA CEO Anna Bligh says, the report contains tough medicine for banks, as well as potential court cases.
Company news

Investment management and financial advice firm IOOF (ASX:IFL) says it’s standing in good stead to meet future regulatory requirements as it’s in the midst of implementing cultural and governance changes. IOOF says it's fully supportive of the recommendations and is committed to helping financial advisers work through the changes. Its shares are trading 13 per cent higher at $5.51 at noon, and year to date its shares are up 7.2 per cent.

Best and worst performers

The best performing sector is Financials adding 4.5 per cent, while the worst performing sector is Healthcare, gaining 0.1 per cent.

The best performing stock in the S&P/ASX 200 is IOOF Holdings (ASX:IFL), rising 13 per cent to $5.51, followed by shares in Steadfast Group (ASX:SDF) and AMP (ASX:AMP).

The worst performing stock in the S&P/ASX 200 is Syrah Resources (ASX:SYR) dropping 3 per cent to $1.46, followed by shares in Domain Holdings Australia. (ASX:DHG), and Saracen Mineral Holdings (ASX:SAR).

Gold and the dollar

Gold is trading at $US1,313 an ounce.
One Australian dollar is buying 71.98 US cents.

Jessica Amir

Finance News Network
Jessica joined FNN in January 2017 after having worked in financial advising for seven years and in TV journalism for seven years, specialising in finance, equities and analysis. She has interviewed former Prime Ministers of Australia, Tony Abbott, Julia Gillard and Kevin Rudd and ex Treasurer Jo Hockey. Jessica has worked as a journalist with Sky News Business, ABC 1, ABC's The Business, ABC24 and has also been a regional Channel 7 and 9 TV reporter with Prime7 and Win News.