APRA increases banks capital requirement by 3%, moves deadline: Aus shares lose 0.1%

Market Reports

by Jessica Amir

The Australian share market closed in the red for the second straight day, losing 0.1 per cent on Tuesday.

It comes as investor concern weighed on the local bourse and on Wall Street, ahead of Federal Reserve Chair, Jerome Powell’s testimony on Wednesday, which is set to factor in stronger-than-expected jobs data.

The Information Technology sector lost the most today, 1.75 per cent. It was the only sector with a loss of over 1 per cent, with a handful of sectors losing between 0.2 per cent and 0.5 per cent. Selling in techs stocks echoed the theme on Wall Street on Monday after the Nasdaq lost 0.8 per cent with Apple shares losing over 2 per cent.

At the closing bell the S&P/ASX 200 index closed 7 points lower to finish at 6,666.

Futures market

Dow futures are suggesting a fall of 65 points.
S&P 500 futures are eyeing a dip of 8 points.
The Nasdaq futures are eyeing a fall of 31 points.
And the ASX200 futures are eyeing a 13 point fall.

Economic news

The business sector has lost significant momentum over the past year or so, according to NAB’s business survey for June. Business confidence largely unwound the bounce in May and while business conditions rose in the month, they remain below average. It was the first full month post the election, and despite the share market trading near all-time highs, business confidence remained under par.

Company news

Pilbara Minerals Limited (ASX:PLS) signed a new offtake agreement with China’s Great Wall Motor Company, with first shipments expected in August 2019. Meantime in a market update it advised it shipped 43,214 dry metric tonnes (dmt) which was at the upper end of the previous guidance. Its production was also consistent with guidance, however, was impacted by June’s plant shutdown for 4.5 days. PLS says production and sales will return to full capacity for the December 2019 Quarter. Meantime the company is progressing well on the proposed POSCO JV for a South Korean chemical conversion facility. Shares in Pilbara Minerals Limited (ASX:PLS) gained 5.1 per cent, closing at $0.52.

The Australian Prudential Regulation Authority (APRA) has increased the loss-absorbing capacity for big banks (authorised deposit-taking institution (ADIs)). APRA announced ‘systemically important banks’ including Australia and New Zealand Banking Group (ASX:ANZ), The Commonwealth Bank of Australia (ASX:CBA), Westpac Banking Corporation (ASX:WBC) and National Australia Bank (ASX:NAB) will be required to lift their total capital by 3 per cent (of risk-weighted assets (RWA)) by 1 January 2024. APRA initially planned for banks to increase their capital by 4 to 5 per cent and planned for the deadline to be earlier, so it’s a bit of a relief for banks. For ANZ, it will need to increase its capital (RWA) of $396 billion by $12 billion. CBA (ASX:CBA) will need to raise its $447 billion in capital (RWA) by $13 billion, WBC’s $420 billion by $13 billion and NAB’s $403 billion by $12 billion.

New Century Resources (ASX:NCZ) has continued to generate record quarterly zinc production results from its Century mine in North West Queensland, with the June 2019 quarter hitting 20,450 tonnes.

Liontown Resources (ASX:LTR) has announced a 353 per cent increase in its mineral resource at its fully-owned WA, Kathleen Valley Lithium Project, raising its maiden mineral resource to 74.9 million tonnes.

Best and worst performers of the day

The best performing sector was S&P/ASX Consumer Staples adding 0.9 per cent while the worst performing sector was S&P/ASX Info Tech, shedding 1.8 per cent.

The best performing stock in the S&P/ASX 200 was Breville Group Limited (ASX:BRG), rising 6 cent to close at $17.01. Shares in Pilbara Minerals Limited (ASX:PLS) and Speedcast International Limited (ASX:SDA) followed higher.

The worst performing stock in the S&P/ASX 200 was Afterpay Touch Group Limited (ASX:APT), dropping 4.9 per cent to close at $25.69. Shares in Nufarm Limited (ASX:NUF) and Reliance Worldwide Corporation Limited (ASX:RWC) followed lower.

Asian markets

Japan’s Nikkei has added 0.1 per cent, Hong Kong’s Hang Seng has shed 0.6 per cent and the Shanghai Composite has lost 0.3 per cent.

Commodities and the dollar

Gold is trading at US$1,394 an ounce.
Light crude is US$0.06 up at US$57.57 a barrel.
One Australian dollar is buying 69.57 US cents.