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The promise of an economic boost from looser lending laws triggered strong gains as bank stocks steered the market towards a second straight weekly win.

The S&P/ASX 200 jumped 74 points or 1.3 per cent after Federal Treasurer Josh Frydenberg announced an overhaul of credit laws to make it easier for households and small businesses to borrow. The financial sector surged 3.6 per cent towards its biggest gain in four months.

What’s driving the market

Frydenberg announced reforms to encourage lending by cutting red tape. Borrowers will not need to supply as much information as before, but will have greater responsibility for the information they provide under a “borrower responsibility” principle. The changes come as JobSeeker and JobKeeper payments start to wind back, depriving the economy of a tailwind.

“Now more than ever, it is critical that unnecessary barriers to accessing credit are removed so that consumers can continue to spend and businesses can invest and create jobs,” Frydenberg said. “Credit is the lifeblood of the Australian economy.”

The changes came as welcome news for the battered financial sector, which slumped to a near four-month low earlier this week. Westpac led the charge, jumping 6.6 per cent a day after copping the biggest civil fine in Australian history for breaches of anti-money laundering laws. NAB gained 6.5 per cent, ANZ 5.3 per cent, CBA 3.3 per cent, Bendigo and Adelaide Bank 4.4 per cent and Bank of Queensland 2.8 per cent.  

“It’s a massive move,” ThinkMarkets Market Analyst Carl Capolingua said. “If they can hold these gains, it is going to be a really important move on the charts. These stocks have been in an almost one-way downtrend for a few months now. A move like this can really stamp a bottom… Given the substantial influence the banks have on the Australian index, this could really support us going forward.”

Going up

The broader market was encouraged by gains on Wall Street following a volatile session. The S&P 500 put on 0.3 per cent. The Dow Jones Industrial Average closed 52 points or 0.2 per cent ahead after being down as much as 226 points and up more than 300 points.

US index futures jumped this morning after a new Democrat stimulus plan appeared to narrow differences with Congressional Republicans and the White House. S&P 500 index futures rose 14 points or 0.4 per cent.

Today’s rally set the ASX on course for a second straight weekly advance following a slender five-point rise last week. Mid-session, the index was on track for a weekly tally of almost 90 points or 1.5 per cent.

The fireworks in the financial sector slowly percolated through to the broader market. By mid-session, eight of 11 sectors were ahead, with energy +1.5 per cent and materials +1.3 per cent providing the greatest support. Newcrest climbed 2.1 per cent, Woodside 2 per cent, BHP 1.8 per cent, Santos 1.5 per cent and Rio Tinto 1.1 per cent.

Going down

Supermarket Coles was one of a handful of heavyweights to miss the bus, falling 0.9 per cent. Rival Woolworths dropped 0.6 per cent, Fortescue 0.4 per cent and CSL 0.3 per cent.

Fashion retailer Premier Investments eased 0.7 per cent despite announcing a 29 per cent increase in full-year net profit to $137.8 million. The company increased cash on hand by $258.6 million to $448.8 million.

Toll road operator Atlas Arteria dropped 2.2 per cent or 14 cents as it traded without an 11 cent dividend. Health insurers NIB and Medibank sank 2.9 per cent and 1.5 per cent, respectively.

Other markets

A positive morning on Asian markets saw China’s Shanghai Composite advance 0.2 per cent, Hong Kong’s Hang Seng 0.6 per cent and Japan’s Nikkei 0.7 per cent.

Gold retreated as rising US index futures signalled an improvement in appetite for risk. Gold slid $2 or 0.1 per cent to $US1,874.90 an ounce. Brent crude climbed nine cents or 0.2 per cent to $US42.03 a barrel.

The dollar inched up 0.03 per cent to 70.57 US cents.

What’s hot today and what’s not

Hot today: Every time home security provider Scout Security (SX:SCT) mentions Amazon, the share price jumps. Last month, shares briefly doubled on news the company’s Scout Alarm had been integrated with Amazon’s Alexa Guard security offering. This morning shares shot from 7.3 cents to 13.5 cents before paring their gain to 34.3 per cent after Scout revealed it will be a launch partner when Amazon releases its Alexa Guard Plus premium service next year.

Not today: Shareholders bailed out of Arrow Minerals (ASX:AMD) following disappointing assays from the mineral explorer’s Dassa gold prospect in Burkina Faso. With significant intersections amounting to six metres at 1.1 g/t and a metre at 1.9 g/t, unimpressed investors sent the share price down 27.8 per cent. The company plans further drilling next quarter.

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