Markets Live: ASX choppy as banks offset miners

The RBA governor may take heart, though, from Kudlow's remarks last week that a strong US dollar is good for America. A stronger greenback means a relatively weaker Aussie, and this would not be unwelcome as the RBA contemplates when it will finally raise interest rates.

Kudlow believes a strong US dollar increases the purchasing power of Americans and keeps a lid on inflation.

"A great country needs a strong currency," Kudlow said on financial news network CNBC, his former employer. "I have no reason to believe [President Trump] doesn't favour a sound and strong and steady dollar."

The US dollar rebounded late last week, buoyed by robust economic data, rising consumer inflation expectations, a near-10-year high two-year Treasury yield and perhaps Kudlow's upbeat dollar talk.

The Australian dollar retreated to around $US77.10c by the weekend, as commodity prices declined.

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Every one of the esteemed panel disagreed with the statement that the tariffs would "improve Americans' welfare".

Chicago's Austan Goolsbee said the tariffs are the economic equivalent of "punching [your]self in [the] face".

Nobel prizewinner Richard Thaler said: "In net we want more trade, not less. This is unlikely to help and runs the risk of starting a trade war."

"Sad," he added, in imitation of President Trump's tweeting style.

Yale University professor Christopher Udry said: "It will improve some Americans welfare, and hurt many others. On balance it's a very costly way to help those who gain."

Harvard's Eric Maskin compared it to the Smoot-Hawley tariffs of the Thirties which were blamed for worsening the Great Depression.

"I thought we had learned our lesson with Smoot-Hawley," he wrote.

- The Telegraph

Investors were buying up the mining sector, with BHP up 0.8 per cent, RIo Tinto higher by 0.9 per cent, South32 up 1.5 per cent and Whitehaven Coal up 2.5 per cent.

Energy firms were also strong, with Woodside up 1.3 per cent, Origin Energy up 2.2 per cent and Oil Search higher by 1.8 per cent.

Oil futures were down 32¢, or 0.5 per cent, at $65.89 a barrel after gaining 1.7 per cent on Friday.

Banks were mostly lower, with NAB down 0.3 per cent, CBA down 0.2 per cent and ANZ down 0.1 per cent. Westpac managed to eke out a 0.2 per cent advance.

Banks are facing another day of scrutiny from the royal commission into the financial services sector that kicked off in earnest last Tuesday.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.5 per cent.

The pain was not confined to Asia, with the June contract for E-Minis futures on the S&P 500 down 0.3 per cent and FTSE futures off 0.4 per cent.

While Wall Street had bounced on Friday, the major indices still ended lower for the week. The Dow lost 1.57 per cent, the S&P 1.04 per cent and the Nasdaq 1.27 per cent.

The decline was surprising given figures from Bank of America Merrill Lynch showed a record $43.3 billion of inflows into equities last week, outpacing bond flows for the first time since 2013.

Whether the cash continues to flow could depend on what the Fed decides on Wednesday. All 104 analysts polled by Reuters expected the Fed would raise rates to between 1.5 per cent and 1.75 per cent on Wednesday.

They were less certain on whether the "dot plot" forecasts of committee members will stay at three hikes this year or shift higher.

- Reuters

Liu He, Xi's top economic adviser, was named as a vice premier, signalling that he will take the lead role in policy-making with Yi in support.

By promoting an official who has served as No. 2 to incumbent governor Zhou Xiaochuan for more than a decade, China is signalling that it is seeking policy continuity at the central bank.

Now set to retire, Zhou has steered the institution through the global financial crisis, overhauled monetary policy tools and overseen the elevation of the yuan to reserve-currency status during his record 15-year term.

- Bloomberg

At the investor day, Brambles revealed it will spend $300 million over the next three years aggressively accelerating the levels of automation and robotics in its plants.

Brambles, a former sharemarket bastion of consistent performance, had a big fall from grace in January 2017 when it revealed a profit downgrade. The downgrade occurred just weeks before Mr Chipchase started in the role.

Brambles on February 19 announced a bottom-line net profit after tax of $US447.2 million for the first half of 2017-18, three times the size of the bottom-line profit a year ago.

This year's figure was bolstered by a one-off $US130.1 million tax benefit stemming from the tax cuts introduced by Donald Trump. Total sales revenue for the first half was up 9 per cent to $US2.75 billion.

Simon Evans reports

The banks traded flat-to-lower, with CBA steady, ANZ down 0.2 per cent, NAB down 0.6 per cent and Westpac lower by 0.1 per cent as the sector came under renewed scrutiny on another day of royal commission hearings.

Supermarkets were lower as well, with Wesfarmers giving up a portion of Friday's Coles demerger-related gains to trade down 1.8 per cent and Woolworths down 0.8 per cent.

Cochlear lost 1.8 per cent as it started trading without rights to its latest dividend payout.

Miners were making some headway, however, with BHP up 0.7 per cent, Rio Tinto up 0.9 per cent and South32 up 0.9 per cent.

Energy firms were also strong, with Woodside up 1.7 per cent, Santos up 1.6 per cent and Oil Search up 1.5 per cent.

Brent crude traded down 17¢ at $66.04 as traders paused after a 1.7 per cent rally for the commodity in US trading on Friday.

It was then the Commonwealth Bank's turn to take the stage. And although it was required to exemplify the more challenging vices of "pride" and "sloth", the Sydney-based bank put in a strong performance.

At this stage, we don't know what cardinal sins will be enacted by Westpac and the ANZ Bank (although that one suspects that gluttony and lust are probably outside the purview of the royal commission).

But it would be a mistake to imply that the bankers are the only characters in this gripping allegorical drama.

Rowena Orr, QC, has been perfectly cast in the role of Conscience, with her persistent probing of bankers' misbehaviour, and her polite incredulity at the various excuses offered in its defence.

The whole point of a morality play is to provide lessons about right conduct as the characters face difficult moral choices.

And, as the Hayne royal commission has already amply demonstrated, it's a lesson that's sorely needed in the country's $1.6 trillion home loan industry.

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Unlike most other central banks, the Fed has a double mandate both to keep inflation in check and to ensure full employment.

The question Mr Powell must answer is whether persisting low unemployment in the US will lead to so much demand and successful pressure from workers for wage rises, that it pushes inflation up significantly from its current rate near the Fed's target of 2 per cent. If so, he has to map out a monetary policy strategy to deal with it.

There is almost no doubt that the Fed will raise rates this week. But predictions of future rates could be vital. In December, the median projection from Fed governors was for three rate rises this year; will this now rise to four?

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In a compliance update dispatched late last week, the ASX firmed up its guidelines to stamp out the over-exaggeration of gains from customer contracts and also announced immediate changes to rules relating to disclosures of past misdemeanours of individuals seeking directorships or control of listed companies.

The exchange said it would crack down on companies that announce contracts with major global customers that lack details; that don't mention the contract is conditional or subject to a trial period; that include loosely derived revenue projections; that aren't updated if the contract is terminated; or are presented as material or with other "superlatives" when they are not.

Jonathan Shapiro reports