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ASX: NAB underwhelms while metal prices fall

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Fuseworks Media
Fuseworks Media

By Ric Spooner (Chief Market Analyst, CMC Markets)

US markets provided a positive lead for the Australian market but soft metals prices and this morning’s trading result from NAB create a query over whether the ASX 200 will do as well as its US counterparts.

Support for banks was a key feature of Friday’s rally in US markets. This was driven by President Trump’s order to investigate potential easing of bank regulation and changes to the Dodd Frank. However, while this initiative might help the overall sentiment for global banks, it is not directly relevant to Australian banks.

NAB also produced a solid but underwhelming quarterly trading report this morning. While there are no major surprises it’s clear that revenue growth is hard to come by. With its new domestic focus, the bank’s strategy is centred on restoring Australian market share but its competitors are not going to allow this to happen easily. Although cost increases were partly impacted by temporary factors such as redundancy payments, the overall result relied on an improvement in bad debt expenses to stay in touch with market expectations.

Recent profit taking in mining stocks looks likely to continue this morning in line with base metal prices, which have failed to maintain January’s positive momentum.

Average hourly wage growth was the key feature of Friday’s US Jobs data. The prospect of a wage growth beginning to lift off was, at least temporarily, nipped in the bud with year-on-year growth back to August’s levels at 2.5%. This is not creating any pressure for the Fed to deviate from its current gradualist policy on monetary tightening.

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