The ASX has opened lower after NAB reported a cash profit jump of 17 per cent, but below market expectations, seeing its shares slump more than 7 per cent in morning trade.
US stocks finished at session lows after the US Federal Reserve raised interest rates by another 0.25 of a percentage point to more than 5 per cent.
Follow the day's financial news and insights from our specialist business reporters on our live blog.
Disclaimer: this blog is not intended as investment advice.
Key events
Live updates
Signing off
By Nassim Khadem
That's it from me and Michael Janda for the day.
Catch you next time!
Market snapshot at 4.30pm AEST
By Nassim Khadem
ASX 200: down 0.1% to 7,193.1
Australian dollar: 66.71 US cents
Dow Jones: -0.8% to 33,414 points
S&P 500: -0.7% to 4,091 points
Nasdaq: -0.5% to 12,025 points
FTSE: +0.2% to 7,788 points
EuroStoxx: +0.36% to 4,310 points
Spot gold: -0.75% to $US2,037 ounce
Brent crude: $US72.33 /barrel
Iron ore: -0.56% to $US104.50/tonne
Bitcoin: +.44% at $US29,166
Australian shares close down weighed down by bank stocks
By Nassim Khadem
Australian shares fell 0.1 per cent, down 4.3 points to 7193.1 at market close, weighed down by bank stocks.
National Australia Bank shares fell 6.4 per cent even as the major bank reported 17 per cent increase in its cash earnings, but fell short of analyst forecasts.
The hit to its share price came as the bank warned that the windfall from interest rates had peaked.
Westpac shares fell 4.1 per cent, ANZ declined 2.4 per cent and CBA was down 2.6 per cent.
The update signals a tougher period ahead for lenders which have benefited from a year of rising interest rates by charging more to borrowers while limiting the amount they pay deposit-holders.
Competition in the mortgage market has become so fierce that some banks are offering cash payments to lure borrowers.
NAB chief executive Ross McEwan said the company was focusing on expanding business in areas more profitable than mortgages, such as business lending, where profit in the half-year grew by one-fifth from the same period a year earlier.
-with Reuters
Federal budget bottomline boost could help provide households 'relief'
By Nassim Khadem
Westpac chief economist Bill Evans expects the federal budget bottomline will be $110 billion better off leaving the government extra spending room in the budget.
While it will need to offset an increase in aged care workers wages, he says there's a lot of money available for Treasurer Jim Chalmers to disperse thanks to the iron ore price coming in above Treasury expectations.
Dr Evans expects there will be funding for households including rental relief, energy relief and that JobSeeker will be raised for people aged over 55.
He says housing affordability will also be targeted.
He expects multinationals will come under the microscope and there will be rising taxes for gas companies.
Dr Evans says despite the extra room to spend he expects the government will exercise "a fair degree of discipline" when it comes to spending this budget.
Westpac, Macquarie join ANZ, NAB in passing on rate hike
By Nassim Khadem
Westpac says following the Reserve Bank of Australia's decision on Tuesday to increase the cash rate by 0.25 per cent, the bank will pass on the rate hike to its customers.
The change will be effective May 12 for existing customers and the bank said home loan variable interest rates will increase by 0.25 per cent for new and existing customers on May 16.
Deposit rates for Westpac Life total variable rate with bonus interest will increase by 0.25 per cent to 4.50 per cent on May 12, while Westpac eSaver total variable rate will increase by the same amount for new customers for the first five months, on May 12.
Westpac chief executive of its consumer and business banking, Chris de Bruin, said customers were looking carefully at their budgets as interest rates rise.
"While many are adjusting to making higher repayments, we understand others may need extra help," he said.
"To assist we're reaching out to some customers we believe may need additional support."
Macquarie said it was increasing variable home loan reference rates by 0.25 percentage points, effective May 19.
Macquarie’s savings account welcome rate is increasing by 0.25 percentage points for the first four months on balances up to $250,000, effective May 9.
Bank losses to remain 'low': S&P Global
By Nassim Khadem
National Australia Bank's earnings will remain sound over the next two years, despite increasing margin pressure, according to credit ratings agency S&P Global.
While the bank's net interest margin across the half increased 13 basis points to 1.80 per cent, its margin for the most recent quarter was down 4 basis points.
"This reflects increasing funding costs and strong competition in the Australian mortgage market despite rising interest rates," the agency said in a statement, adding that the bank's "results were solid across all business units and in line with our expectations".
"NAB's credit losses should remain low at about 15 basis points in the next two years, in line with those for other major Australian banks," the statement said.
"The relatively benign economic outlook, low unemployment, and strong household balance sheets should temper the risks to the Australian banking system from high inflation, rising interest rates, and low business and consumer confidence."
It said NAB's capital levels should remain strong.
NAB shares were trading 5.5 per cent lower at 1.15pm AEST at $26.98 off the back of its lower-than-expected profit results.
ANZ passes on RBA rate hike to borrowers
By Nassim Khadem
ANZ has followed National Australia Bank in hiking mortgage rates by 25 basis points following the Reserve Bank's decision on Tuesday.
It will be effective as of May 12.
ANZ will also increase the rate available to savings customers on the ANZ Plus Save account for balances less than $250,000 by 0.25 per cent annually to 4.50 per cent annually, effective May 11.
ANZ said it "continues to review other deposit rates".
Group executive Australia retail, Maile Carnegie, said they would help customers manage their home loans where needed.
"If you are facing difficulty, contact our experienced teams as early as you can to discuss additional personalised support," she said.
Market snapshot at 12.33pm AEST
By Nassim Khadem
ASX 200: down 0.18% to 7,184
Australian dollar: 66.75 US cents
Dow Jones: -0.8% to 33,414 points
S&P 500: -0.7% to 4,091 points
Nasdaq: -0.5% to 12,025 points
FTSE: +0.2% to 7,788 points
EuroStoxx: +0.36% to 4,310 points
Spot gold: -0.42% to $US2,044 ounce
Brent crude: $US72.33 /barrel
Iron ore: -0.56% to $US104.50/tonne
Bitcoin: +.08% at $US29,062
Jenny Craig to file for bankruptcy in US, but Australian business to operate
By Nassim Khadem
Weight loss empire Jenny Craig is closing operations in the United States after 40 years, according to US media reports.
The company's operations in Australia are independent of the US and will continue, a Jenny Craig spokeswoman told ABC News.
"Here in Australia and New Zealand we currently continue to operate and support our clients," she said.
"As always, our priority is to continue providing the best possible service."
In an email sent to US employees on Tuesday (Wednesday AEDT), the company said it will close "due to its inability to secure additional financing," according to a news report from NBC.
The company has about 1000 casual and corporate workers in the US.
For the past two weeks, Jenny Craig had been running out of money as it searched for a buyer.
Bloomberg Law reported last month that the company was pursuing a sale.
More borrowers refinance home loans
By Nassim Khadem
Refinance volumes, fuelled by rising interest rates and cost of living pressure, eclipsed new loans for the first time since early 2020 in many capital cities.
The quarterly PEXA Mortgage Insights Report analyses the nation's property refinance activity and new loans trends.
It found refinance volumes eclipsed new loans in New South Wales, Victoria, Queensland and Western Australia.
The report found 98,527 refinances were completed in the aforementioned states – nearly 2,000 more than the 96,767 new loans issued during the same period.
New loans had not previously dipped beneath 100,000 in a quarter since June 2020 at the onset of the COVID-19 pandemic, it said.
All states posted year-on-year growth in refinances, as borrowers continue to scramble for more favourable deals on their home loan amid rising interest rates.
New loans to fund the purchase of property were down 17.9 per cent on the December 2022 quarter and 25.3 per cent below the figure posted in the prior year.
PEXA's head of research Michael Gill said, "elevated refinancing activity is likely to continue due to the unusually high number of fixed-term loans that will be expiring in the next two years."
"It will also likely be supported by the RBA strongly flagging the possibility of more rises later this year, in order to bring inflation closer to the target band of 2 to 3 per cent."
A slim majority of economists in a snap Reuters poll say the Reserve Bank will likely deliver one more 25-basis-point interest rate rise by the end of September to 4.10 per cent, following its surprise rate hike on Tuesday.
The RBA shocked economists and financial markets when it took the cash rate to 3.85 per cent, with RBA Governor Philip Lowe saying the central bank was "dead serious" about getting inflation under control.
Jobseeker needs to rise: Deloitte Access Economics
By Nassim Khadem
Treasurer Jim Chalmers is under growing pressure to provide relief to struggling areas of society when he delivers the Federal Budget next Tuesday.
There's calls for the government to lift the Jobseeker payment to a 'liveable level' to help vulnerable Australians deal with the soaring cost of living, not just in food but also in services.
The Treasury forecaster Deloitte Access Economics is the latest number cruncher to say Mr Chalmers needs to "do it".
Listen to the ABC's Peter Ryan for more on the Deloitte report here.
ASX opens lower
By Nassim Khadem
The ASX 200 opened 0.8 per cent lower, or down 55.6 points to 7141.8, with investor sentiment dented after US stocks fell amid the Fed's latest move to raise interest rates by a quarter of a percentage point.
NAB shares were trading 7.57 per cent lower at $26.39 off the back of its profit results.
On Wall Street the S&P 500 closed 0.7 per cent lower.
The Nasdaq Composite index was down 0.5 per cent and the Dow Jones Industrial Average fell 0.8 per cent.
Oil prices also dived, with investors worried about a weakening global economy that could dent energy demand.
Brent crude was down 4.4 per cent to $US72.04 per barrel.
Gold lifted 0.8 per cent to $US2039.30 an ounce.
The Fed has signalled it may pause further increases, giving officials time to assess fallout from recent bank failures.
US regulators on Monday seized First Republic, the third major US institution to fail in two months, with JPMorgan Chase agreeing to take US$173 billion of the bank's loans, US$30 billion of securities and US$92 billion of deposits.
The European Central Bank is also set to raise interest rates for the seventh meeting in a row on Thursday to curb inflation.
It comes after the Reserve Bank's shock interest rate rise this week taking the cash rate to 3.85 per cent.
Rising interest rates help drive NAB profit to $4 billion
By Nassim Khadem
National Australia Bank's statutory net profit was just shy of $4 billion for the six months to March 31, up 19 per cent on the same period a year earlier.
The bank's preferred measure of cash profit lifted to $4.07 billion, propelled by business lending and margin growth.
The cash profit climbed 17 per cent in the six months ended March 31, compared to the $3.48 billion in the same period last year. The result was below market expectations.
NAB declared an 83c interim dividend, up from 73 cents in the same period last year.
After the Reserve Bank surprised some economists with another 0.25 percentage point rise in the cash rate this week, NAB chief executive Ross McEwan said there were encouraging signs inflation and interest rates in Australia were peaking.
He said the nation would avoid a "pronounced economic correction", but the full impact of the rising cost of living on households remained uncertain.
He said economic growth was likely to slow, and unemployment would "drift up to around 4.7 per cent by the end of 2024".
NAB is the largest lender to small businesses in the country.
The bank said its total loans grew 6.2 per cent in the half and deposits were up 8.4 per cent, helped in part by its purchase of Citi's Australian retail bank last year.
Margins have risen across the sector amid higher rates. The bank's net interest margin — which compares funding costs with what it charges for loans — rose 14 basis points to 1.77 per cent.
Charges for impaired loans rose to $393 million, up on $2 million in the first half last year.
The bank did not report a rise in mortgage arrears.
The proportion of customers who were 90 days or more behind on their repayments stayed flat at 0.66 per cent.
NAB CEO Ross McEwan spoke to the ABC's Peter Ryan on radio. He will be interviewed by The Business presenter Alicia Barry on tonight's program, which airs at 8:45pm AEST on ABC News Channel.
Market snapshot at 9:20am AEST
By Michael Janda
ASX SPI 200 futures: -0.5% to 7,165 points
Australian dollar: -0.4% to 66.42 US cents
Dow Jones: -0.8% to 33,414 points
S&P 500: -0.7% to 4,091 points
Nasdaq: -0.5% to 12,025 points
FTSE: +0.2% to 7,788 points
EuroStoxx: +0.3% to 463 points
Spot gold: +0.7% to $US2,053/ounce
Brent crude: $US72.33 /barrel
Iron ore: -1.6% to $US100.50/tonne
Bitcoin: +2% at $US29,093
Fed raises rates, sinks Wall Street
By Michael Janda
The big news globally overnight was the Fed's latest move to raise interest rates by a quarter of a percentage point to between 5-5.25%.
The move was widely expected, and the rate hike was softened with the Fed now adopting a meeting-by-meeting approach to rates decisions, rather than leaning towards rate hikes.
US Federal Reserve chair Jerome Powell's press conference saw bond yields decline, despite the rate rise, but that wasn't enough to boost markets, with the S&P 500 index down 0.7%, the Dow Jones off 0.8% and the Nasdaq falling 0.5%.
Here's the summary of what Mr Powell had to say from NAB's Taylor Nugent.
"Powell said that dropping the expectation of further tightening in the statement was 'a meaningful change' but that decisions would be made meeting by meeting and "a decision on a pause was not made today. "
"Powell said 'policy is tight' and relative to a sufficiently restrictive level he said "we feel like we're getting closer and maybe even there" but that it is an ongoing assessment. Ahead of the next meeting we'll get two more employment and CPI reports.
"Powell pushed back on market pricing for cuts, but only by noting that the FOMC views inflation as coming down 'not so quickly'. On those inflation forecasts rate cuts would not be so forthcoming according to Powell, but the push back was conditional on that expectation for stubborn inflation.
"Powell expects the US to avoid a recession, in contrast to the March Staff forecasts."
However, ANZ economists Tom Kenny and Brian Martin think the US economy is still robust enough to warrant another rate rise.
"We see no grounds yet for an early pivot on interest rates," they wrote.
"The change in language reflects a more adaptive approach to setting policy and the fact that effective fed funds are now in line with the median dot plot for Q4.
"Our forecasts pencil in one more 25bp [basis point] rate hike (June), which reflects still strong momentum in the jobs market and elevated inflation. We do not think there is sufficient evidence yet to take further tightening off the table."
Good morning
By Michael Janda
Nassim Khadem and myself will be taking you through today's market action along with news from across the ABC Business Reporting Team.
Plenty of news around with a Fed rates decision and NAB's profit result.
Join us to stay across all of it throughout the day.
