Markets Live: ASX opens higher led by health and materials

As Afterpay's share price rose 37.8 per cent over the past few three trading days on positive US expansion figures, the Treasury Department on Friday quietly released draft legislation that could bring the Australian operations of the soaring no-interest lender under the regulation of ASIC.

Strangely though, the only group that appears to have noticed is the Consumer Action Centre. It put out a press release on Friday applauding the new legislation, which it said would target "unregulated short-term credit like buy-now pay-later", the sector in which Afterpay is the most successful provider.

The legislation, which will now go through a period of open consultation, proposes to formally institute a recommendation of the Financial System Inquiry that called for a product intervention power be given to ASIC allowing it to intervene when there is a significant risk of consumer detriment (as opposed to the current system, which allows it to get involved after the case). The government proposes to allow ASIC to use this power broadly, including over products ASIC doesn't currently regulate that are "functionally similar irrespective of the legal basis on which the provider offers those products". Short-term credit (that less than 62 days, or two months in duration) is explicitly given as an example of such products.

When we called around, there was some dissension, however, about whether the legislation would capture Afterpay. The company, founded by the increasingly wealthy Nick Molnar and Anthony Eisen, is unique in its model even within the buy-now pay-later sector. Its two-month loans don't charge interest, and are free for consumers if they pay on time (otherwise, there are late fees). However, the proposed legislation can be read to collapse these distinctions by its reference to functional similarity. And it seems to strike a balance in that Afterpay wouldn't be regulated like a regular lender, but it would give ASIC the power to intervene if it feared customers were being harmed.

Even if there is a bit of uncertainty surrounding this, for the $3.2 billion company, now one of Australia's largest by valuation, it strikes us as rather odd we haven't seen more discussion of this. Though maybe it's hard to hear the slow grinding of policy formation over the sound of investors popping the champagne corks.

Much of the focus has been on AMP, which lost three directors and its chairman, but as the banking royal commission heard in April, CBA is the "gold medallist" when it comes to the issue of fees for no service.

Joanna Mather has the full story here.

Unaudited accounts suggest full-year revenue growth of more than 40 per cent and earnings growth of more than 90 per cent.

But investors weren't impressed, sending the stock (ASX:KGN) down 9.52 per cent to $5.99 by midday - which is the lowest the stock has traded since December last year.

Kogan.com's shares - which were the best performing on the ASX last year - have now fallen almost 39 per cent since the start of June.

Founder and CEO Ruslan Kogan said in a statement that the company "finished the financial year with a strong quarter of continued growth".

"We are excited about all the growth initiatives we are implementing, as we continue to make the most in-demand products and services more accessible and affordable for our customers".

But all eyes are on the spread between US short-term and long-term debts, currently at 33 basis points.

Director at Joseph Palmer & Sons in Melbourne, Alex Moffatt, says the Australian bond prices tell us there is a better outlook for our economic growth and inflation.

But, he will start to get really worried if the difference between short and long-term US bond rates gets much smaller, known as a flattening yield curve.

"If the US curve gets under 20 basis points I would really start taking a bit of risk off the table," Mr Moffatt says. "[Such as] selling stocks geared to economic growth, but you want to hang onto the defensive stocks."

Reporter Darren Gray says a Wine Australia report came out this morning showing Australian wine exports are booming with string of records broken in 2017-18.

Total wine exports are up 20 per cent to $2.76 billion. Export volumes are up 10 per cent with the average value per litre increasing by 9 per cent.

And exports to China jumped 55 per cent to $1.12 billion, but exports to the United States dropped 8 per cent.

(By the way, if wine is your thing, Netflix is has a great movie called Sour Grapes about collector Rudy Kurniawan)

Mayors from five major metropolitan councils — Yarra, Moreland, Whittlesea, Darebin, Wyndham — gathered at Parliament House on Tuesday morning to say "enough is enough".

"This is a crisis," said Moreland mayor John Kavanagh, "and we are here to make sure reducing poker machine harm is a crucial state election issue."

Victorian poker machines have a bet limit of $5, apart from inside Crown casino, as does South Australia and Queensland. NSW and the ACT have a bet limit of $10.

In a report in 2010, the Productivity Commission recommended a $1 cap on poker machines. The report estimated that problem gamblers' share of total Australian gaming machine losses was about 40 per cent.

Full story here.

"The catalyst for the sell off in long term bonds may have been the spike in Japanese yields as reports suggest the Japanese central bank may begin tightening monetary policy after years of ultra loose policy."

The Bank of Japan had been keeping yields down by buying bonds, what some call quantitative easing. Many governments did this after the global financial crisis, but Japan has been doing it for longer.

"It's just to stimulate the economy, but after many years of doing that there are now reports that they are going to begin the process of reversing that," Mr O'Loughlin says.

"That will allow yields to begin rising, which I guess is a sign that they think the economy is strong enough to handle that. It has a flow-on effect that all other rather would start increasing as well."