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ASX: Markets assess bank regulatory risk

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Fuseworks Media
Fuseworks Media

By Ric Spooner (Chief Market Analyst, CMC Markets)

The ASX 200 index looks like rounding out a week of sideways drift with another relatively steady performance today.

Futures markets are indicating a positive open for the ASX 200 this morning based on an uptick in US markets last night. However, traders will be keen to assess the market mood on bank stocks this morning.

Selling in the big 4 banks continued yesterday as investors reacted to the possibility that APRA will require them to hold more equity to support housing loans. This morning, press reports are also suggesting that the government may soon ask the Productivity Commission to conduct a formal review of competition in the banking system. This carries the risk of recommendations which, at least at the margin, would be negative for the big 4 banking oligopoly. Continued selling of banks in response to this regulatory risk would be a headwind for the ASX 200 index today.

Traders will have a watching brief on tonight’s US jobs and wage data. Continued momentum in job growth and steady trend growth in wages would bode well for consumption growth in the US, supporting the recent improvements in global trade and manufacturing activity.

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