Hike rates

NAB and ANZ hike rates, Qantas reveals Alan Joyce pays; ASX win after break to remember Queen Elizabeth

The Australian equity market ended the week higher as NAB and ANZ raised mortgage interest rates and Qantas revealed that Alan Joyce had returned to his full base salary.

The ASX 200 closed 0.7% higher on Friday at 6,894 points.

The benchmark also closed higher on Thursday with a strong 1.8% gain and this latest gain means it closed 1% higher for the week.

However, Qantas shares ended the day down a slight 0.2%.

It was as Australia’s national flag carrier released its 2022 annual report, in which it noted chief executive Alan Joyce had returned to his pre-pandemic base pay level in the 2021-22 financial year.

Mr. Joyce’s base salary had been cut for the first two years of the pandemic, but has now returned to $2.17 million.

However, Qantas said Mr Joyce had not received bonuses in the previous financial year, so his overall salary was still 77% below pre-pandemic levels.

The news comes as Qantas continues to receive criticism over delayed planes, canceled flights and unstable service.

This reporting season, Qantas recorded a net loss of $860 million for the 2022 financial year, compared to a loss of $1.69 billion the previous year, as revenues jumped 54% compared to 2021 .

ABC’s Four Corners this week revealed the grave concerns of former and current Qantas employees over their fears that the stellar reputation of the airline they love could be undermined.

Qantas chairman Richard Goyder said he hoped this annual report “represents the final chapter in the terrible impact the COVID crisis has had on Qantas”.

“It has been difficult for our shareholders, our customers and especially for our employees. But we have succeeded and it is great to see so many people flying again.

“The restart has been bumpy, which shows how difficult it is to bring an airline out of hibernation while dealing with record COVID rates in the community.”

NAB and ANZ fully pass on RBA rate hike

While many sectors of the ASX were down, the very large resources and financials sectors led Friday’s gains.

The mining sector ended up more than 3%, while energy was up 1% and financials rose 0.2 percent.

Commonwealth Bank gained 0.3% and Westpac another 0.4%.

ANZ gained 0.5% and NAB 0.8% as both banks announced they were raising interest rates on home loans by 0.5%.

This means they fully pass on the Reserve Bank’s decision this week to raise the key rate by half a percentage point, taking it to 2.35%, its highest level in nine years. .

Both NAB and ANZ say the rate hikes will take effect on Friday, September 16.

“An early conversation with your bank is so important to staying on track financially,” said Rachel Slade, NAB’s personal banking manager.

“When clients speak to our NAB Assist team early, we find that 90% of our clients are back on their feet within 90 days.”

Neither bank mentioned whether it was also raising savings rates.

“ANZ will continue to review its savings rates,” ANZ noted.

Elsewhere on the ASX, the best performers were Minerals (+13.4pc) and Tyro Payments (+9.1pc). Tyro won after rejecting a takeover bid that its board said undervalued it.

ASX marks the death of the Queen

The Australian stock market held a minute’s silence at 11:00 a.m. AEST to mark the passing of Queen Elizabeth.

The London Stock Exchange will trade as normal on Friday, but is expected to close on the day of the monarch’s funeral.

“The day of Her Majesty The Queen’s funeral is expected to be a public holiday and in this scenario the London Stock Exchange would be closed to trading,” a spokesperson said.

“He should remain open for business as usual during the official period of mourning.”

Wall Street also marked the Queen’s death with a minute’s silence.

The pound fell against the US dollar and euro on Thursday (London time) in choppy trading as Britain’s longest-reigning monarch and figurehead for seven decades died.

“There is no significant impact on the pound,” Amo Sahota, director of currency advisory firm Klarity FX, told Reuters.

He added that the monarch’s death “will have no impact on the economy”.

Europe hit by rate hike as inflation bites

However, one of the main drivers of the market was the European Central Bank’s decision to raise rates by an all-time high of 75 basis points.

“The Governing Council has taken today’s decision and expects to raise interest rates further as inflation remains far too high and is expected to remain above target for an extended period” , the ECB said in a statement.

“According to Eurostat’s flash estimate, inflation reached 9.1% in August.

“Spiking energy and food prices, demand pressures in some sectors due to the reopening of the economy, and supply bottlenecks continue to drive up inflation.”

On Wall Street, the three major indexes gained 0.6%.

They were lifted by financial institutions and healthcare companies, as investors digested hawkish remarks from policymakers that cemented bets on a sharp rise in interest rates later this month.

Indices rebounded in choppy trade as concerns over the US Federal Reserve’s next steps to rein in soaring inflation lingered.

Money market traders currently see an 86% chance that the Fed will raise rates by 0.75 percentage points at this month’s meeting, Reuters reports.

The Australian dollar is fairly stable against the greenback at just over 68 US cents.

This comes as the US currency hits new highs against many major currencies.

Its dollar index is at a 20-year high this week, Bloomberg reports.

Ten-year Treasury yields also rose 0.1% overnight on heightened expectations for higher rates.

Meanwhile, Bitcoin gained 0.1% overnight. It’s hovering just below $20,000, a far cry from where it was around $67,000 earlier this year.