Markets Live: ASX slips along with banks

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12:11pm

Shares traded marginally lower at lunchtime, erasing early gains, with banks unable to hold onto a morning advance.

The S&P/ASX 200 index lost 3 points, or 0.1 per cent, to 5946 while the All Ordinaries slipped 2 points to 6052. The Australian dollar edged up 0.1 per cent to US77.19¢.

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.

11:24am

Anyone watching the Hayne royal commission's public hearings in Melbourne this week could well be forgiven for suspecting that they had accidentally stumbled upon a medieval morality play, with the big four bank taking it in turn to act out the seven deadly sins, writes AFR columnist Karen Maley.

National Australia Bank appeared first on stage, and the Melbourne-based bank did an excellent job of portraying "greed" in its various guises.

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.

Read more here

Commissioner Kenneth Hayne.
Photo: Royal Commission

11:03am

Some ideas never go away. So it is with the Phillips Curve. This week will see the most important meeting of the Federal Reserve's rate-setting committee in years, as its new and relatively unknown chairman Jay Powell takes the chair for the first time, writes the FT's John Authers.

He now becomes the latest and most critical voice in a debate over the relationship between unemployment and inflation that has now lasted more than half a century.

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?

Read the full comment here

Federal Reserve Chairman Jerome Powell .
Photo: JACQUELYN MARTIN

10:41am

The Australian Securities Exchange has tightened its listing rules to clamp down on companies over-hyping customer contracts and force the disclosure of past misconduct by directors, following scandals at Big Un and GetSwift that cost investors hundreds of millions of dollars.

The changes come after The Australian Financial Review investigations into technology companies Big Un and GetSwift revealed investors in the company were kept in the dark about facts that could be considered materially important.

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

ASX chief executive Dominic Stevens.
Photo: David Moir

10:27am

Australian shares gained in early trading on Monday, with financials notching mild gains and Woodside advancing after a rally in oil prices.

The S&P/ASX 200 index climbed 31 points, or 0.5 per cent, to 5981 while the All Ordinaries moved up 29 points, or 0.5 per cent, to 6084. The Australian dollar traded at US77.15¢.

Banks edged higher, with ANZ up 0.4 per cent. CBA up 0.6 per cent, NAB up 0.2 per cent and Westpac advancing by less than 0.1 per cent, with the sector facing another session of royal commission hearings today.

Woodside gained 1.3 per cent following a sharp jump in oil prices in US trading hours on Friday, with Brent crude futures jumping 1.7 per cent after US stock prices rose and investors covered short bets.

In the resources sector. diversified BHP climbed 0.9 per cent and peer RIo Tinto gained 0.7 per cent. Pure iron ore play Fortescue Metals declined 0.3 per cent and lithium producer Galaxy dropped 1.5 per cent.

Wesfarmers gave up some of Friday's strong gains, with a 0.9 per cent decline, while vitamin maker Blackmores fell 1.8 per cent.

10:01am

Commonwealth Bank of Australia endured a torrid opening week of hearings at the Hayne royal commission and the financial giant's chief executive has warned staff it is not likely to get any better when the inquiry resumes on Monday morning.

CBA, along with the Australia and New Zealand Banking Group, is set to again have a starring role when the second week of hearings begins in Melbourne on Monday.

The commission is scheduled to hear from senior CBA retail bank executive Clive van Horen as well as a customer, Irene Savidis.

It is expected that the commission will examine credit card products including the credit card protection insurance. CBA pulled the plug on card protection insurance earlier this month.

Matt Comyn, who runs CBA's retail bank but is set to take over as chief executive from Ian Narev next month, wrote to staff on Friday to warn that this week the commission would highlight cases where "customers have been treated unfairly by us".

Mathew Dunckley and Sarah Danckert report

Lynda Harris of Aussie Home Loans fronted the commission last week.
Photo: Jason South

9:44am