Prices current around 1:00pm AEST
Live updates on the major ASX indices:
Looking ahead to Wall Street’s opening tonight, and the three key indices are all showing modest declines – not exactly a driving over the precipice vibe.
At 3pm AEST:
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The latest report on Residential Mortgage Backed Securities (RMBS) from credit ratings agency Fitch shows a sharp deterioration in mortgage arrears over the first few months of this year.
“Australia’s 30+ day conforming mortgage arrears rose by 23bp [basis points] qoq to 1.36% in 1Q25 [first quarter 2025], while non-conforming arrears rose more sharply by 39bp to 5.32%,” the agency’s report. released today, notes.
“First quarter arrears typically rise due to post-holiday financial pressure, but this quarter’s jump was almost 3x the historical average of 8bp.
“Fitch attributes the larger-than-usual increase to the cumulative strain of prolonged higher interest rates on households and persistent inflation stretching household budgets.”
Fitch analysts say the RBA may have saved Australia from a developing mortgage crisis.
“Despite the deterioration in performance, the interest rate cuts of 19 February 2025, whose impact would not have been evident in the data to 31 March, and the subsequent interest rate cut in May 2025, should prevent further deterioration in Australian mortgage performance in the near term.
“Fitch expects a further rate reduction before the end of 2025, which should again counter any possible further deterioration in mortgage performance.”
It does make one question how much the timing of the February rate cut was driven by evidence that a rising number of households were in severe mortgage stress.
Australian policymakers seem to have perfected the art of heading off potential housing crises, much to the relief of home owners and banks, and to the lament of aspiring buyers who remain priced out of the market.
Conservation group ACF has put out a report, where it analysed around 100 examples of deforestation in Australia between July 2023 and July 2024.
ACF looked at mortgages on these connected land titles, and found major bank NAB was far and away the biggest lender, financing twice as often as any other bank.
We’ve just heard back from NAB, which notes it is Australia’s largest lender to agriculture, providing banking services to about a third of all agribusinesses.
“NAB is addressing many of the recommendations made in the ACF report and continues to revise its approach to supporting customers and managing deforestation risk,” it says.
The bank’s latest annual reports also noted that it investigates when it becomes aware that customers are engaged in, or are alleged to be engaged in, illegal land clearing.
ACF also says “alarmingly”, they found that in 42 cases, the clearing could have impacted Matters of National Environmental Significance (MNES) including clearing the land of threatened species, potentially breaching national environment laws.
“These cases are being referred to the Department of Climate Change, Energy, the Environment and Water for investigation,” ACF notes.
The ASX is clawing back earlier heavier losses to be down 0.6% to 8,428 points at 1:30pm AEST.
Energy stocks are trimming earlier gains as the price of oil eases back.
Beach Energy is 2.9% higher and refiner/retailer Viva Energy is up 3.9%.
The big miners are largely struggling despite slightly higher iron ore prices, both BHP and Fortescue are down 1.3%.
The banks are generally lower, although CBA (+0.4%) is bucking the trend.
Viva Energy (3.6%) is the top mover this morning, while Metcash is up 3.2% on a strong full year result.
Among the bottom movers are the data centre REIT DigiCo (-5.4%) and its big shareholder/parent HMC Capital (-4.6%).
From the ACCC’s report, here are four of its key takeaways.
Australians need greater protection against unfair trading practices
These practices include making it difficult for consumers to cancel their subscriptions, and using design interface strategies which impede consumer choice and exploit behavioural biases. These practices harm users, reduce trust in digital services, and have a dampening effect on the digital and wider economy.
72% of Australian consumers surveyed by the ACCC reported that they had encountered potentially unfair practices such as accidental subscriptions or hidden fees when shopping online.
Australians need mandatory codes for the most powerful digital platforms to prevent harms from a lack of competition
This lack of competition can limit growth opportunities for other firms, stifle innovation, reduce consumer choice and lead to higher prices. Examples include self-preferencing of their own products and services, exclusivity agreements, and conduct that makes it unnecessarily harder for consumers to switch to a competitor’s service.
Mandatory codes of conduct offer a flexible, targeted solution to address these harms in particular digital markets where intervention is most needed. App marketplaces / mobile operating systems and ad tech services should be prioritised.
Australians need an external dispute resolution body to help resolve complaints with digital platforms
Australian consumers and businesses who experience issues on digital platforms like unfair trading practices or fake reviews are often left with no avenues for redress or resolving disputes.
82% of Australian consumers surveyed by the ACCC believe there should be an independent external dispute resolution body to resolve their complaints with digital platforms.
Emerging services and technologies need continued scrutiny for potential harms
Evolving digital markets and emerging technologies (like generative AI) may exacerbate existing risks to competition and consumers or give rise to new ones. It is critical that the proposed digital competition regime enable the ACCC to continue monitoring changes to services it has previously examined, as well as new technologies that emerge over time.
Much of the focus of the morning has been on the expected surge in oil prices and the impact on not only the price of fuel at the bowser, but also the flow on to overall inflation.
And any discussion on inflation inevitably leads to talk about interest rates and the RBA.
While the correlation between oil prices and inflation is obvious, it is also complicated.
J.P. Morgan’s Ben Jarman says there is a basic arithmetic to the equation.
“A 10% increase in the average WTI oil price (in AUD terms) over a quarter leads to a rise in automotive fuel prices of about 4%q/q,” Mr Jarman wrote in a note this morning.
“Applying CPI weights, that increase in automotive fuel prices adds close to 0.15% to quarterly headline CPI growth.”
However, that’s not the way past oil shocks have panned out as it ignores issues such as currency and economic growth.
“Past modelling on the impact of oil price changes on the Australian economy suggests that a supply shock that lifts oil prices leads to a decline in consumer prices in Australia of about 0.2% (percentage points) in the first year,” Mr Jarman said.
“The fall in the price level reflects both some appreciation in the exchange rate in the short term as well as a fall in real GDP of about 0.2% (percentage points) in the first year.”
So far, the price rise reflects more a rise in the risk premium rather than a pure supply shock.
Given the Australian dollar is considered a “risk asset” that’s a negative for the currency, so as Mr Jarman points out, “this time around there’s less scope for an offsetting movement in the exchange rate”.
“At the same time, sustained elevation in geopolitical uncertainty suggests a greater fall in economic activity, and so a greater drag on inflation in the medium term.”
Then there’s the impact of spillovers of higher oil prices on the broader basket of costs.
Mr Jarman said oil shocks generally lead to only modest spillovers into other CPI sub-groups.
“With only limited transmission to other sectors, the impact of increases in fuel prices on the CPI should die out over time rather than generating sustained inflation.”
If that holds, it is at least good news for mortgage holders looking for more rate cuts.
“That makes the initial impact of oil price increases on inflation easier to look through for the RBA, particularly now that inflation is back within the target band and core measures will for the most part strip out the impact of one-off price rises,” Mr Jarman said.
“We’d broadly expect the RBA to treat the recent increase in both oil prices and geopolitical uncertainty in the same manner it is treating trade policy uncertainty: some short-term risk to higher inflation but with downside to both prices and activity in the medium term.”
One of the bright spots on the market today is the grocery and hardware business Metcash after releasing its 2025 full year results.
It’s leading the pack among its ASX 200 peers, up 3.8% to $3.84/share at 11:45am AEST.
Metcash reported a 10.1% increase in statutory profit to $283.3 million, although its underlying profit dipped 2.4% to $275.5 million, largely due to a restructuring cost which the company took above the line.
J.P. Morgan’s retail analyst Bryan Raymond noted the result was at the top end of guidance.
“The $7.7m of restructuring costs (primarily headcount reductions to reposition the business) taken above the line indicates the underlying result was stronger than pre-guided levels suggest,” Mr Raymond said.
Mr Raymond said other key positives were a more favourable outlook for the company’s hardware business and resilience on food sales and margins.
“We expect low single digit earnings upgrades driven by better-than-expected hardware sales trading update and outlook, as well as a resilient food sales trading update,” Mr Raymond said.
MST Financial analyst Saul Kavonic says the Organization of the Petroleum Exporting Countries (OPEC) can usually “save the day” in the event of major supply disruptions, by ramping up output — but that might not be an available solution if Iran follows through on a threat to the passage of global energy shipments through the Strait of Hormuz.
“It’s actually OPEC supply capacity which is at risk here,” he told ABC News Channel.
“There will be no spare capacity anywhere around the world to come and save the day if something happens here.
“And we have a situation where the United States’ Strategic Petroleum Reserve, that’s their strategic stocks, are near record lows because they’ve already wound those stocks down after the Ukraine war.”
Here’s more of Mr Kavonic’s analysis on the potential ramifications for the economy and global energy prices in this piece from before the US strike on Iran over the weekend:
Prices current around 11:25am AEST
Live updates on the major ASX indices:
Alan Kohler’s Sunday explainer this week was a look into how superannuation, which was intended to fund retirements and reduce pressure on the aged pension, will soon cost more than the pension.
Tax breaks opened at the end of the Howard government made superannuation the most attractive tax shelter for wealthy Australians.
The lack of inheritance taxes mean the portion of those super savings that remains unspent in retirement (most of it for wealthier households) is passed on to the next generation with little taxation paid.
It’s a massive issue, which Alan does well to sum up in 140 seconds.
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Global markets remain on edge about whether Iran will disrupt the flow of oil and gas through the crucial Strait of Hormuz in the wake of the US bombing.
The price of Brent crude oil is currently up 2.7 per cent, while the ASX and Asian stock markets are falling.
MST Financial senior energy analyst Saul Kavonic joined business reporter Emilia Terzon on ABC News Channel.
He described the Middle East as “the most important source of oil and also gas in the world”, noting the Strait of Hormuz is where about 20 per cent of the world’s oil and liquefied natural gas supplies transit through to reach global markets.
“We’ve never actually seen that level of supply disruption ever occur.
“Many of us might remember when we saw the energy prices spike in 2022 turn in the wake of the Ukraine war, and for those who are old enough to remember the big oil price shocks in the Iranian revolution in the late 70s and into the 80s.
“What we’re talking about here, if Iran actually carries out what they threaten to do, would be three times the size of the shocks that we’ve seen in the past.
“It could drive petrol at the pump to 50 per cent or even double current prices for a period of time and so that’s what’s got oil prices on edge here.”
A quick check of Asian markets, and while Hong Kong, Shanghai and Shenzen are yet to open, stocks in Tokyo and Seoul are down:
One for your trivia night … from July the price for ordinary small letters – known as the basic postage rate – will increase from $1.50 to $1.70.
The current median price of a stamp among OECD postal service operators is $1.93.
Australia Post will still be losing money on the deal.
Prices for ordinary large letters up to 125 grams will increase from $3 to $3.40, and ordinary large letters between 125g and 250g will rise from $4.50 to $5.10.
The ACCC has not objected to Australia Post’s proposed lift to the price. Unless the minister for communications disapproves, it’ll kick in from July.
Here’s ACCC Commissioner Anna Brakey:
“We understand that these price increases will mean extra costs for consumers. However, our decision to not object to Australia Post’s proposed price increase is based on evidence that the costs to Australia Post of providing the letter service are greater than the revenue it produces.”
Australia Post has submitted that its letters business is in decline, which is consistent with a trend occurring across postal services globally. Currently, Australia Post only delivers about two letters to each household a week and expects reserved letter volumes to continue to decrease by about 10.6 per cent annually until 2027–28.
“Our final decision recommends Australia Post examine ways to alleviate affordability issues for businesses, including those subject to requirements to send physical mail. Further we made recommendations to address a number of other concerns expressed by stakeholders during consultation.
“We are especially mindful of the impact price changes can have on vulnerable Australians, and so our decision paper recommends that Australia Post increases the number of concession stamps per customer, which is currently capped at 50 per year.”
The Australian share market remains in the red in early trade.
The ASX 200 is currently down about three-quarters of a per cent, so it’s declined further from the open.
Here’s a look at how the sectors are faring so far:
The best performing stocks so far:
And the worst falls:
Prices current around 10.10am AEST
Live updates on the major ASX indices:
Five minutes into the session and the ASX 200 is down 0.4% … not calamitous, but jittery.
As expected, oil and gas producers are doing well, with the energy sector up 1.5%.
JB Hi-Fi faces a $13.5 million penalty for allegedly misleading customers over store credit promotions.
The retail group says it’s reached an agreement with the consumer regulator, subject to Federal Court approval, to resolve legal proceedings launched last year.
The ACCC accused JB Hi-Fi-owned appliance chain The Good Guys of making false and misleading statements when offering store credit to customers for purchasing goods of a specific value between July 2019 and August 2023.
According to court documents, The Good Guys’ advertising materials failed to mention customers also needed to opt-in to receive marketing materials and stay subscribed for a minimum period in order to qualify for the credit, which was only able to be used for a very short period.
The ACCC also alleged that thousands of eligible customers missed out on the credit.
In a statement to the ASX today, JB Hi-Fi said The Good Guys and the ACCC would make joint submissions seeking court approval for the penalty and $200,000 of the regulator’s legal costs, and a remediation program for customers.
It said the one-off expense of $13.7 million will be recognised in its results for the current financial year, while the cost of compensation has previously been accounted for and won’t impact its results.
“The Good Guys takes its compliance with the law very seriously and has worked cooperatively with the ACC to resolve the matter,” the statement read.
As Steve reported earlier, in initial trade after the weekend, Brent crude futures rose more than 4% and briefly passed $US80 a barrel.
But, as you can see from the graph below, those initial gains subsided quickly this morning.
A lack of competition, a need to protect consumers, a concern about “prevalent” harms — a major new report about digital platforms is waving red flags about how we interact with the tech giants.
Our competition watchdog, the ACCC, has just released its Digital Platform Services Inquiry, a five-year examination of what to worry about and what to do about it.
The key findings, directly quoted, are here:
More to come …
