Australia’s All Ordinaries (INDEXASX: XAO) (All Ords) index ended slightly lower on Monday as markets came to grip with higher interest rates from Westpac Banking Corp (ASX: WBC), lower housing activity and a wash of economic data.
Consumer finance
Westpac Bank shares were a focal point after the bank announced an ‘out of cycle’ interest rate increase on mortgages. As reported by news.com.au, Suncorp Group (ASX: SUN) and Adelaide bank followed Australia’s second-largest bank (Westpac) in raising rates.
As we covered in detail here, interest rates on home loans were expected to rise because the cost of bank funding is heading higher. Westpac pointed to “higher wholesale funding costs” as a reason for pushing interest rate increases onto homeowners. Like many other banks, Australia’s largest banks tap into global markets for capital to fund their loans. In the USA, a key debt market, Federal interest rates are increasing.
Suncorp said local bank funding rates are also rising, despite the RBA keeping its ‘official’ rate on hold. “In March, we acknowledged the increase in the Bank Bill Swap Rate (BBSW), which has continued to rise,” Suncorp’s CEO of Banking & Wealth David Carter said in a statement.
Australian share market
Australian gold mining company Northern Star Resources Ltd (ASX: NST) announced a successful capital raising following its decision to acquire the Pogo gold mine in Alaska for $US270 million.
Commenting on the capital raising, Northern Star’s executive Chairman Bill Beament said, “Existing shareholders, fund managers and analysts from around the world have said they share our view that Pogo is an exceptional acquisition which meets our criteria of owning Tier One assets with strong growth potential in Tier One locations.”
The A2 Milk Company Ltd (ASX: A2M) commented on China’s regulatory changes for importers and sellers of products into mainland China and via e-commerce websites. Last week, Chinese regulatory authorities passed a law governing Cross Border E-Commerce (CBEC).
“This framework is broad in scope and will apply in respect of all e-commerce activities, both domestic and cross border (CBEC),” a2 Milk Company noted in a public filing.
Read more: a2 MilkUpdate On China CBEC
Property
In property news, CoreLogic’s Tim Lawless reported a fall in Australian house prices for the 11th month in a row. “Weaker housing market conditions can be tied back to a variety of factors, foremost of which is the tighter credit environment which has slowed market activity, especially amongst investors,” Lawless noted.
“Fewer active buyers has led to higher inventory levels and reduced competition in the market.”
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