Good morning traders. Thanks to @ttward, @Ravgnome and the Aftermarket loungers.

 

Well, the report is out. Make your own minds up about what it all means, but the stain of the Hayne Report is going to be one that may take quite some time to be rid of.

 

I think this comment from Josh Frydenberg sums things up; "the banking sector must change, and change forever".

 

That said, the recommendations may not as bad a feared, so in typical markets style we may well see the banks bounce having potentially factored in worse news already.

 

ASX Market Report

 

Financial stocks have given the Australian share market a surprising lift despite the sector bracing for the fallout from a landmark misconduct inquiry.

 

The benchmark S&P/ASX200 index closed 28.4 points, or 0.48 per cent, higher at 5,891.2 points on Monday, while the broader All Ordinaries was up 27.7 points, or 0.47 per cent, at 5,963.0 as analysis of Kenneth Hayne's financial services report gets underway.

 

The Royal Commission findings were released by the government shortly after the close of market.

 

Rakuten Securities analyst Nick Twidale said Monday's financial sector gains were an unexpected feature of an otherwise unremarkable day.

 

"It remains to be seen if (bank shares) will remain at that state after the report comes out but it's not been a bad day," he said.

 

Mr Twidale said the Chinese holiday had dampened enthusiasm for equities while a lack of detail around US-China trade negotiations were cause for concern.

It would be a different story on Tuesday, he said.

 

"We'll likely go from a moribund day to a really volatile day tomorrow - not only because of the report, but we've also got the RBA decision, and retail trade data".

 

ANZ climbed highest of the big four, adding 1.16 per cent to $25.22, followed by Westpac, up 1.18 per cent to $24.87 and NAB, 1.01 per cent higher at $24.03.

 

Commonwealth Bank shares were still up 0.77 per cent despite being ordered by ASIC to provide its financial planning services for free, for now, after not doing enough to fix its fees-for-no-service issues.

 

Macquarie Group added 0.25 per cent to $116.70, while insurers QBE, IAG and Suncorp each rose between 0.53 and 2.1 per cent.

 

Stocks in beleaguered wealth manager AMP fell 1.34 per cent to $2.21 and IOOF Holdings dropped 4.5 per cent to $4.88.

 

Elsewhere, energy stocks finished higher but the mining sector weighed on the market.

 

Boral shares dropped 7.89 per cent after the building materials provider cut its domestic outlook and flagged delays at big projects would dent half-year profits.

 

Earlier, the Aussie dollar slipped after dire home building data dealt another blow to the economic outlook, buying 72.30 US cents from 72.39 US cents on Friday.

 

ON THE ASX:

* The benchmark S&P/ASX200 index up 28.4 points, or 0.48 per cent, at 5,891.2 points at 1630 AEDT on Friday

* The All Ordinaries was up 27.7 points, or 0.47 per cent, at 5,963.0

* At 1630 AEDT, the SPI200 futures index was up 36 points, or 0.62 per cent, at 5,837.0.

 

CURRENCY SNAPSHOT AT 1630 AEDT:

One Australian dollar buys:

* 72.30 US cents, from 72.39 US on Friday

* 79.36 Japanese yen, from 78.82

* 63.19 euro cents, from 63.28

* 55.31 British pence, from 55.26

* 104.94 NZ cents, from 104.75

 

GOLD:

The spot price of gold in Sydney at 1630 AEDT was $US1312.88 per fine ounce, from $US1320.66 on Friday.

 

Royal Commission Report

 

(via Canberra Times)

The following are some of the key recommendations made by Justice Hayne.

 

The banks:

• Require mortgage brokers to act in the best interests of the intending borrower, not the bank providing the loan. Breaching this law would result in a fine.

• Borrowers rather than lenders should pay the mortgage broker for their services.

• Lenders would be banned from paying trail commissions to mortgage brokers for new loans.

• Expand the Banking Executive Accountability Regime laws to track those responsible for any breach of lending laws.

 

Bank treatment of farmers and those with poor English skills:

• Establish a national scheme to mediate farm debts.

• Banks would be barred from charging dishonour fees on basic accounts.

• Amend the banking code of conduct so people in remote areas or those with poor English skills can access and conduct banking.

• Require banks not to charge default interest on loans secured by farm land in an area declared to be in drought or subject to other natural disasters.

• Have banks ensure managers of distressed farm loans are experienced agricultural bankers. Recognise that appointment of receivers on a farm loan is a "remedy of last resort".

• Car dealers should no longer be exempt from national consumer credit protection laws.

 

Financial Advice:

• Create a new disciplinary system for financial advisers, with all advisers required to be registered. A single disciplinary body would oversee the system.

• Grandfathered provisions of conflicted remuneration should be repealed as soon as possible.

• The current cap on commissions for life risk-insurance products should be reduced and ultimately set at zero.

• All remaining conflicted remuneration exemptions should be referred with a view to banning them outright.

• All banking licence holders be required to report "serious compliance concerns" about individual financial advisers to ASIC on a quarterly basis.

 

Superannuation:

• A single default super fund for all workers. People would be "stapled" to a single default account.

• Ban on advice fees deducted from MySuper accounts.

• Advice fees for non-MySuper accounts would be prohibited in most cases.

• Heavy handed selling of superannuation to be abolished.

 

Referral to ASIC and APRA for possible action:

• Justice Hayne has referred to regulators a long list of companies for possible criminal or civil action. The 24 companies include Suncorp, ANZ, NAB, CommInsure, Allianz, AMP and ClearView.

 

Insurance:

• Heavy-handed selling of insurance products would be banned.

• Funeral expense insurance policies would be defined as a financial product, bringing it under the oversight of ASIC.

• Impose a cap on the commission that can be paid to car sellers for add-on insurance products.

• Handling and settlement of insurance claims would be defined as a financial service.

 

Culture and governance:

• All financial service companies would review at least once a year the design and features of their remuneration systems for frontline staff.

• All financial companies should assess their own culture and governance.

 

The regulators:

• Retain ASIC and APRA but have them overseen by a new independent authority that would assess the two regulators to ensure they are carrying out their responsibilities.

• ASIC overhauls its approach to enforcement, with a focus on court action rather than infringement notices.

• ASIC should continue its annual reporting of breaches of financial service regulations but in future name the companies rather than just the type of breach.

 

For those hurt by the finance sector:

• There should be a change to the way community legal groups helping those with financial complaints are funded, moving it to a more "predictable and stable" system.

• Compensation scheme of last resort for those unable to receive financial recompense from their institution.

 

 

Also this from Josh Frydenberg:

 

Australian Treasurer Josh Frydenberg has delivered the Government's response to the banking royal commission's final report.

 

He said "the banking sector must change, and change forever".

 

Frydenberg said the Government was committed to making banks responsible. It will take action on all 76 recommendations and will seek to hold those who abuse the community's trust to account.

 

He said the restoration of trust in the financial system and delivering better consumer outcomes were the Government's key priorities, along with maintaining the flow of credit.

 

He said the royal commission advanced the interests of consumers in four key areas, including enhancing the effectiveness of regulators and raising accountability standards.

 

Frydenberg said the Government would introduce the following changes;

 

• Brokers will be banned from trailing commissions and volume bonuses

• Grandfathering of conflicted remuneration will end on 1 January 2021

• Hawking of superannuation and insurance products will be prohibited

• Agricultural loans will be subject to a range of new regulations aimed at helping farmers keep their land

• Financial advisers will be subject to new accountability measures

• A new 3-person oversight body will be established to oversee ASIC and APRA

• Regulators will be subject to capability reviews every three years. Graeme Samuel AC will lead the first review, which will begin soon

• The Federal Court's jurisdiction will be expanded to cover corporate misconduct

• A compensation scheme of last resort will be established

   

Frydenberg said the royal commission did not call in to question the strength of the system, but shone a light on misconduct that could be tolerated. He said he had full confidence in ASIC's ability to clean up the industry.

 

In Asia

 

Asia stocks hovered near four-month highs on Monday after a mixed performance on Wall Street at the close of last week, while the dollar firmed against the yen following strong U.S. employment and manufacturing data.

 

MSCI's broadest index of Asia-Pacific shares outside Japan was a shade weaker. It had scaled a four-month peak on Friday amid a surge by its global peers.

 

Trade was subdued with many of the region's markets closed for the Lunar New Year. China's financial markets are closed all week, while those in South Korea are shut until Thursday.

 

Hong Kong's stock exchange closed at midday, with the Hang Seng up 0.2 percent.

Australian shares ended half a percent higher, as did Japan's Nikkei.

China's sprawling services sector maintained a solid pace of expansion in January even though growth moderated slightly, a private survey showed on Sunday, offering continued support for the world's second-largest economy as manufacturing cools.

 

"After last week's risk appetite revival, the data pulse and the tone of Fed speakers will be important. For the Goldilocks market to continue, we need to find a delicate balance between improving data and still-neutral central banks," strategists at ANZ wrote.

Read more

In Europe

 

European shares were flat on Monday as the heavyweight banking sector fell further following poor results from Julius Baer and as optimism fueled by strong U.S. economic data faded.

 

The pan-European STOXX 600 index added 0.1 percent after being lifted on Friday by upbeat U.S. jobs data which helped eased worries over the health of the global economy.

 

Euro zone stocks fell 0.1 percent, while the UK’s FTSE 100 rose 0.2 percent, helped by a weaker pound.

 

Banks were the biggest drag to the STOXX 600 with Julius Baer falling more than 4 percent after a tough end to 2018 caused the Swiss private bank to scale back growth targets.

 

Corporate news is set to intensify throughout the week with trading updates on Wednesday and Thursday, notably from BNP Paribas and ING among banks and Sanofi and GlaxoSmithKline for pharmaceuticals.

Read more

 

In the United States

 

Wall Street gained on Monday to hit session highs boosted by technology shares ahead of Alphabet’s earnings, the last FAANG stock to post quarterly results.

FAANG earnings have been a mixed bag so far, with Apple Inc and Facebook Inc posting better-than-expected quarterly results last week, while Netflix Inc and Amazon.com Inc forecast downbeat current-quarter numbers.

 

Google parent Alphabet Inc rose 1 percent, and more than 2.5 percent gains in high-flying tech names such as Apple Inc and Microsoft Corp boosted the Nasdaq, leading the technology sector higher by 1.28 percent.

 

About 71 percent of nearly half of the S&P 500 companies that have reported so far, have exceeded analysts’ estimates, according to IBES data from Refinitiv.

 

The S&P index recorded nine new 52-week highs and no new lows, while the Nasdaq recorded 55 new highs and 12 new lows.

 

At 1:12 p.m. ET the Dow Jones Industrial Average was up 37.77 points, or 0.15 percent, at 25,101.66, the S&P 500 was up 8.81 points, or 0.33 percent, at 2,715.34 and the Nasdaq Composite was up 65.61 points, or 0.90 percent, at 7,329.48.

 

 

 

Earnings Reports Ahead

(via Comsec)

Australian News

 

The Aussie dollar faltered after dire home building data dealt another blow to the economic outlook and added more impetus to speculation about a cut in interest rates.The dollar eased slightly to 72.42 US cents and away from last week's two-month peak of 72.95 US cents. It now has chart support in the 72.20-30 US cents area. 
Read more

 

Australia's economy might look good but Labor wants voters to remember bills are rising, wages are flat, and household savings are dwindling. In a major economic speech, shadow treasurer Chris Bowen has outlined what he says is the true state of the economy after six years of coalition government. 
Read more

 

The release of domestic jobs and construction data today revealed the Australian economy was facing mounting domestic growth headwinds as the east coast housing bubble continued to deflate. Last month building approvals slumped 8.4 per cent, far worse than the expected 2 per cent drop, and came on top of a downward revision in November. 
Read more

 

Crimes, radical changes to super, home lending from Hayne final report 
Read more

 

Commonwealth Bank's financial planning customers will get financial advice for free after the bank failed to meet its obligations from the fees-for-no-service scandal.Commonwealth Financial Planning Limited said on Monday it will stop charging ongoing fees to its customers by April 1. 
Read more

 

Massive shake-up on the cards for superannuation. Trustees and executives in the $2.8 trillion superannuation sector will be subject to the same oversight as bank chiefs, millions of dollars in fees will be abolished, and workers will only be able to be defaulted into an account once – in a once-in-a-generation set of changes recommended by the banking royal commission. 
Read more

 

The energy regulator plans to roll out new guidelines electricity retailers must follow when dealing with vulnerable customers as an increasing number of households struggle to pay rising power bills. The changes, which include plans to fine retailers that fail to enact adequate hardship policies, come after more than 72,000 households had their power cut off due to non-payment of bills last financial year, up 11 per cent on the prior year. 
Read more

 

Global News

 

Tesla says it's getting close to making the most important vehicle in its lineup: the Model Y. Last week, CEO Elon Musk announced Tesla will begin preparing for 2020 production of the mass market SUV. He expects work to begin sometime this year, and he predicted the Model Y would become Tesla's best selling vehicle. 
Read more

 

Maxwell Technologies Inc. MXWL, +49.67% said Monday it has agreed to be acquired by Tesla Inc. TSLA, +0.58% in a deal that values the batter maker at about $218 million. The stock deal values Maxwell shares at $4.75 each, a 55% premium to Friday's closing price of $3.07. 
Read more

 

Goldman Sachs could claw back executive pay over 1MBD scandal. 
Read more

 

Legendary investor Bill Gross, the onetime king of the bond market, announced plans on Monday to retire after more than four decades in finance. Gross, 74, will step aside on March 1 to focus on managing his personal assets and charitable foundation, according to Janus Henderson (JHG), the firm he joined in 2014 after a messy divorce with PIMCO. 
Read more

 

U.S.-listed shares of Canadian medical cannabis company Namaste Technologies Inc. fell 20% in early trades Monday, after the company said it has fired its controversial chief executive for cause and launched a review of its strategic options that may end in a sale. 
Read more

 

Brexit pushes UK business confidence to its lowest level in nearly a decade. Companies in the United Kingdom are spending less and scaling back plans because of Brexit fearsthat have pushed business confidence to its lowest level in a decade. The dire outlook was revealed Monday in surveys published by Deloitte and the Institute of Chartered Accountants in England and Wales. 
Read more

 

China’s central bank rolls out ambitious reform plan. A new Macro-Prudential Management Department will inherit duties of the Monetary Policy Department and focus on the yuan exchange rate and its internationalization 
Read more

 

China's biggest online movie-ticketing platform flopped in its stock market debut in Hong Kong, becoming the latest disappointing tech listing in the city. Shares in Maoyan Entertainment, which is backed by Chinese internet giant Tencent (TCEHY), fell as much as 5.4% in early trading Monday. The stock closed down 1%. 
Read more

 

Cadbury has lost more ground in its long-running battle to protect the particular purple it uses to wrap its chocolate. After losing an appeal last month, Cadbury has given up a trademark. 
Read more

 

Stock News

 

Boral shares tumbled after the building materials provider cut its domestic outlook and flagged delays at big projects would dent half-year profits. 
Read more

 

Artemis Resources enters trading halt pending restructure of board and management team 
Read more

 

Red River’s Thalanga operations continue despite adverse Queensland weather. The company recently reported record production of zinc, lead and copper for the December 2018 quarter. 
Read more

 

Funeral company Propel expanding in NZ. Australia's second-largest operator of funeral homes and crematoriums has continued its expansion in New Zealand, buying more funeral homes in the North Island for $NZ6.4 million ($A6.1m). 
Read more

 

No new operators for Fremantle’s container terminals. Fremantle’s existing container terminal operators DP World and Patrick could maintain their control of the trade for up to 21 years. Minister for Ports Alannah MacTiernan said today the tender for new leases to operate Fremantle Ports’ container terminals had been narrowed to the current two operators, DP World and Patrick. 
Read more

 

Telstra blames NBN Co for rising copper costs. Telstra says NBN Co’s decision to use Sky Muster for hard-to-serve premises on metropolitan fringes means higher costs to keep copper infrastructure online for tiny numbers of geographically-spread users. 
Read more

 

GO2 People sets ‘solid’ growth foundation for remainder of 2019 financial year. The recruitment, building and training services provider is working to a target to triple its business operations. 
Read more

 

Napoleon Perdis: 28 stores shuttered as chain put up for sale 
Read more

 

 

Out of respect for your fellow traders, please include the Stock Code in your post (or use the OT tag for off topic stuff).

 

Breakfast this way. Trade well.