APRA to lift capital requirements for investor and interest only loans: Aus shares close 0.04% lower

Market Reports

by Katrina Bullock

The ASX 200 opened higher extending gains this morning following its close yesterday at a fresh 11.5 year high. The iron ore price rose 5 per cent overnight causing a strong performance from iron ore miners such as BHP Group (ASX:BHP) and Rio Tinto (ASX:RIO). Momentum dropped this afternoon however after the Australian Prudential Regulation Authority confirmed that it would increase capital requirements for investor and interest only loans. Following this news the big 4 banks took a hit which weighed on the market causing the market to close 0.04 per cent lower after 5 straight sessions of gains.McMillan Shakespeare (ASX:MMS) took a hit today following news that an unfavourable interlocutory decision had been handed down in relation to the class action against one of its companies, Davantage Group and NuCoal Resources (ASX:NCR) are behind a new bill that's been introduced into parliament.

The S&P/ASX200 index

At the closing bell the S&P/ASX 200 index closed 3 points lower to finish at 6,544.

Futures market

Dow futures are suggesting a fall of 58 points.
S&P 500 futures are eyeing a dip of 6 points.
The Nasdaq futures are eyeing a fall of 30 points.
And the ASX200 futures are eyeing a 2 point fall tomorrow morning.

Economic news

The Australian Bureau of Statistics released April data on overseas arrivals and departures. Over the year to March, tourist arrivals are down by 0.8 per cent, that’s the lowest annual rate in 7.5 years.

The Australian Prudential Regulation Authority has confirmed that it will implement the key parts of the February 2018 proposals to increase capital requirements for investor and interest only loans. The changes are expected to take effect in 2022 and will not require banks to raise more capital overall. However they will mean that banks with higher exposure to property investor loans and interest only loans must hold a higher amount of capital than those focused on owner-occupiers who are paying principal and interest.

Broker moves

Citi has downgraded AGL Energy (ASX:AGL) to a sell, with a 12-month price target of $17.78 – down from $19.40. This follows the company's $3 billion cash bid for Vocus. Citi say that the acquisition appears to be an attempt to fill an earnings hole and that AGL is currently at peak earnings. Shares in AGL Energy (ASX:AGL) closed 0.8 per cent higher at $19.55.

Company news

Salary packaging and novated leasing company, McMillan Shakespeare (ASX:MMS) saw a drop in their share price this afternoon following news that an unfavourable interlocutory decision had been handed down in relation to the class action against one of its companies, Davantage Group. The class action seeks orders that warranties are void, and seeks either the restitution or a refund of the premium paid and interest on that amount. The final decision in relation to the matter is expected to be handed down at trial which is scheduled for April 2020. Shares in McMillan Shakespeare (ASX:MMS) closed 0.2 per cent lower at $13.80.

Legislative Council member Reverend Fred Nile has introduced a private member's bill in the NSW Upper House of parliament. NuCoal Resources (ASX:NCR) has released an announcement pushing for the bill which would allow an arbitrator to be appointed to consider compensation for NuCoal shareholders who saw the share price dive after the government cancelled the Doyles Creek Exploration Licence. The licence which was announced on Christmas Eve in 2008 was the subject of an Independent Commission Against Corruption inquiry in 2013 which found the mine exploration licence process was corrupt and that the public had knowledge about the controversial nature of the exploration licence from as early as 2009. Shares in NuCoal Resources (ASX:NCR) closed 4.2 per cent lower at 2 cents.

Wesfarmers (ASX:WES) have inked a deal to snap up Australian online retailer Catch Group Holdings for $230 million.

New Zealand pay television satellite provider, Sky Network Television (ASX:SKT) appointed Blair Woodbury as its Chief Financial Officer.

Earthmoving equipment provider, Emeco (ASX:EHL), has announced its expecting its earnings for the 2019 financial year to be about 40 per cent higher than its 2018 results.

Afterpay Touch Group (ASX:APT) announced it raised $317.2 million via a fully underwritten institutional placement, initially planning to raise $300 million.

IPOs

Wagering services operator, PointsBet Holdings (ASX: PBH) started trading today. It floated with an issue price of $2, opened at $2.20 and closed at $2.24.

Best and worst performers of the day

The best performing sector was Materials adding 2.1 per cent while the worst performing sector was Healthcare, shedding 1.7 per cent.

The best performing stock in the S&P/ASX 200 was Emeco (ASX:EHL), rising 14.2 per cent to close at $1.89. Shares in Ausdrill (ASX:ASL) and Saracen Minerals Holdings (ASX:SAR) followed higher.

The worst performing stock in the S&P/ASX 200 was Challenger (ASX:CGF),dropping 3.8 per cent to close at $7.64. Shares in Bapcor (ASX:BAP) and Cleanaway Waste Management (ASX:CWY) followed lower.

Asian markets

Lower: Japan’s Nikkei has lost 0.4 per cent, Hong Kong’s Hang Seng has lost 1.8 per cent and the Shanghai Composite has lost 0.3 per cent.

Commodities and the dollar

Gold is trading at US$1,337 an ounce.
The iron ore price rose 5 per cent to US$106.61 a tonne.
Iron ore futures are pointing to a rise of 3.1 per cent.
Light crude is down 21 cents to US$53.05 a barrel.
One Australian dollar is buying 69.47 US cents.