Markets Live: ASX mixed at the open, banks lower

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11:15am

The big four banks will repay customers up to $2 billion in 2018/19 leading to a fall in earnings per share across the sector of 4 per cent, according to the latest estimates from analysts at Morgan Stanley.

Morgan Stanley's Richard Wiles says he was forced to quadruple his estimates for customer remediation in 2018/19 following a slew of announcements from the major banks ahead of full-year results in November.

"We previously assumed that the major banks would incur $500m of customer related refunds and remediation (including fines and penalties) in FY19. However, we now forecast $2b in FY19 and $875m in FY20," the note to clients reads.

James Frost has the full story here.

10:42am

Rio Tinto chairman Simon Thompson backed down on plans to introduce a "simplified" remuneration structure to avoid the investor backlash now facing Telstra, National Australia Bank and other major companies adopting these new pay models.

Company directors and consultants are embracing the latest trend in executive pay, ahead of a fiery AGM season where current and former bank directors are expected to come under fire following the banking royal commission.

Companies including Telstra, QBE, Wesfarmers, AMP and Perpetual have led the way adopting these new pay models but QBE and AMP have already suffered major protest votes and Telstra faces a pay revolt next week.

National Australia Bank, JB Hi-Fi and iSentia are expected to face a potential backlash in the coming weeks as they follow the trend of collapsing short-term and long-term incentives into a single variable model to try to simplify executive pay.

Patrick Durkin has the full story here.

9:57am

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Wall Street finished an up-and-down session slightly lower, setting up the ASX to inch into negative territory at the open, writes Kyle Rodda.

The growth-versus-risk paradigm shifted further in favour of the latter in the last 24 hours, as a multitude of stories compounded the bearish sentiment mounting global markets. Though Chinese markets were more stable yesterday, and IMF report downgrading global growth forecasts for the first time since 2016 reinforced the possible growth-sapping impacts of the unfolding US-China trade war.

Risks in Europe piqued again, following renewed inflammation of tensions between the Italian government and European bureaucrats, weakening the EUR/USD and pushing European bond spreads wider. While the trade war story also dented the growth story, after news broke that the US Treasury Department may be poised to officially label China a currency manipulator.

Read the full 8@eight here.

9:42am

Here are the overnight market highlights:

SPI futures down 9 points or 0.2% to 6017 at 5am AEDT

AUD +0.3% to 70.94 US cents

On Wall St at 2pm: Dow -0.2% S&P 500 -0.1% Nasdaq flat

In New York, BHP +0.7% Rio +1% Atlassian +0.7%

In Europe: Stoxx 50 +0.4% FTSE +0.1% CAC +0.4% DAX +0.3%

Spot gold flat at $US1187.95 an ounce at 1.58pm New York time

Brent crude +1.7% to $US85.31 a barrel

US oil +1.2% to $US75.19 a barrel

Iron ore +2.5% to $US71.14 a tonne

Dalian iron ore +1.2% to 513 yuan

LME aluminium -0.5% to $US2056 a tonne

LME copper +1.8% to $US6292 a tonne

2-year yield: US 2.89% Australia 2.03%

5-year yield: US 3.06% Australia 2.26%

10-year yield: US 3.22% Australia 2.77% Germany 0.55%

US-Australia 10-year yield gap as of 5am AEDT: 45 basis points

9:16am

The Australian Banking Association will outline ambitious plans to ban commission payments linked to legacy financial advice products, promise to stop charging dead customers and end the fees-for-no-service rort with a suite of changes to the banking code of practice to be announced on Wednesday.

ABA chief executive Anna Bligh said charging ongoing advice fees to dead people and fees for no services was inadequate and the changes would address two key issues to emerge from the Hayne royal commission.

"It has always been unacceptable for any organisations to charge fees without providing a service," Ms Bligh said.

"When someone loses a loved one, they need support and compassion as they finalise their loved one's financial affairs. Charging ongoing advice fees to dead people is clearly unacceptable."

James Frost has the full story here.

8:58am

Good morning and welcome to Markets Live for Wednesday.

Your editor today is William McInnes.

This blog is not intended as investment advice.

Fairfax Media with wires.

Markets Live: ASX mixed at the open, banks lower

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