the COB: CommBank crash

Added: 2026-05-14

[00:00:05][music] >> From Berenberg Rue Studios, the Osbiz COB is the key stuff you need to know about the day in business and finance.

[00:00:19]Hello, welcome to the COB this post budget Wednesday. I'm Juliet Sally, great to have your company. What a busy day it has been for everyone in the markets, everyone in politics, everyone digesting what the federal budget means for them and their investments. But of course, the big news today was this massive fall that we saw from one of the biggest stocks on the market, CBA, getting close to a record fall in fact and its biggest intraday fall since COVID, really playing on the overall market sentiment. So let's have a look at where the CBA 200 is finishing the day's trade down by 6/10 of 1%. The S&P ASX 200 also lower today, dropping by some 40 points or half of 1% as we head into match off 8,630 points, setting a new 20-day low. So this CBA crash is really, I guess, the key focus for investors. It's biggest one-day loss since COVID-19 sell-off in March 2020. CBA's third-quarter cash profit of $2.7 billion missing market expectations. This was due to higher than expected bad debt provisions. Maybe a little bit of selling because of the CGT changes as well. We'll ask our guest Mark Gardner his thoughts on that coming up. Elsewhere though, the other big stock on the market, which yesterday overtook CBA as the most valuable company on the S&P ASX 200 or on the stock market I should say, is BHP and it got another boost today. So further cementing its status here as the largest company listed on the market, rallying to an all-time high for a second session. We've got copper above $14,000 US dollars renewed Chinese demand. And then the calm before the storm. This is City's call that Australian wages held steady the growth in the March quarter, but City saying the result could prove to be the calm before the storm because the Fair Work Commission is weighing another large minimum wage increase that they say risks keeping inflation elevated forcing further rate rises. The wage price index up by 8 of 1% in the quarter 3.3% annually in line with what the market was looking for in the public sector. We saw higher child care worker pay flow through into the data as well. All right, let's have a look at the damage from the banks. We mentioned CBA there. Wow, 10% lower $17.56 $153.94 is where your CBA shares sit this afternoon. Westpac off by more than 3% ANZ NAB also under pressure. Macquarie Group there. Well, it is the outlier, isn't it? Rising by almost 1%. The miners I mentioned the flow through into commodities lifting BHP to a fresh record above $61. Rio also looking really solid up 2% to $189.33 MinRes and South 32 looking good, too. And then let's have a look at some of these consumer discretionary stocks a little bit mixed.

[00:03:11]You know, not too much of I guess an impact there from the federal budget. We know we're still going to be facing higher interest rates, but that cash back that extra $250 that we're going to get. Well, that's not going to come through until the next financial year of 2027-28, which a lot of economists I spoke to today said is quite good because the RBA is hoping that inflation will be back within their target band by then.

[00:03:37]Getting into the nitty-gritty though, we touched there on CBA having that massive fall. Westpac also came under pressure.

[00:03:43]Now, UBS thinks that CBA and Westpac are the most exposed out of the big four to the negative gearing crackdown.

[00:03:51]Elsewhere, Aristocrat had a really good session up more than 13%. It reported a rise in first half profit, also expanded its share buyback program by a billion dollars. Temple & Webster, well, it was down by more than 6%. Its full year 2026 guidance has been cut. And they say it'll come in about 30% below what the market was looking for. Heleus also plunging, lowering its full year earnings guidance and launching a strategic review of its Agilent biolabs after weak pathology volumes and rising labor costs weighed on performance.

[00:04:24]All right, let's welcome to the COB, Mark Gardner from MPC Markets. Good to see you. Good afternoon. You were just telling me off air, this is one of the, or if not the, um, budget that's had the biggest implication on investor sentiment in your career. Yeah, I mean, look, I started in the mid-90s and probably too young around that, you know, Costello changes, but but essentially it's been fairly quiet up until that, you know, up until now, really. Um, this is a this is a huge budget.

[00:04:52]I'm surprised. Look, I mean, CBA's results today mildly disappointing, obviously, but I'm surprised that Westpac's not down by near the same, um, I think that negative gearing impact is is incredibly negative for property investment, um, just across the board and and I think it I think investors are very wildly underestimating what what sort of consequences that's going to have.

[00:05:17]Because we've had property go up for ever, basically, and you know, we and I don't think the I don't think the government's probably thought through they've just pushed a lot of people into 5% deposit mortgages and then, you know, LVR's going to get pretty tricky if we get a pullback in the property price.

[00:05:33]So, for the first time in, well, my my lifetime, um, people are actually genuinely concerned about property. So, I think there'll be set we we maintain the negative gearing in on the ASX, um, and and for share investing, etc., I think that's going to be a positive, but we were already seeing a very large flow of um of boomer investors or you know, retiree investors who were who were already identifying how low the yield was, how expensive property was, and were selling and coming into a lot of our structured investments, our fixed coupons, and things like that around 12 uh 12 and 1/2% uh but they just like the income.

[00:06:10]Um so, people were already starting to send it away and I think that you know, negative gearing particularly and you know, is going to up the ante there. So, it could be a very good it could be a really good thing for the Australian market in terms of you know, property.

[00:06:22]Uh so much investing money's been taken up by property for so long that essentially you can you know, now shares are an option. Um So, this is going through into winners and losers more broadly. We can go back to the share investor in a moment, but um so what is positive in your world is this new build, the the triple tax cut package, but the impact here to these discretionary ta- trust and private health rebate is going to hurt.

[00:06:48]>> Yeah, I mean look, whilst that's a big negative for discretionary trust, um yeah, I I it'll be good to be an accountant over the next 12 to 18 months, I I can tell you that.

[00:06:59]But that that's more of a broad winners and losers in terms of the general you know, the general populace um you know, they they were that I think the private health care rebate slash and that sort of affects older um you know, older population as well. Um is you know, that's a that's a pretty big deal and was quite unexpected.

[00:07:17]I get the point with the new builds and where you know, um a lot of these concessions will still apply, but you know, it's the the supply issue hasn't been about being able to attract money. It's been about being able to attract labor and um regulation, etc. And the discretionary trust particularly um I mean, that's an enormous move. I mean you're going to have you're going to see so many sort of what I mean, wealthy families and family offices like so many people across Australia that are going to have to completely restructure.

[00:07:47]Um and you know, the um And I think it's going to I think from a personal perspective, it'll um you know it's probably going to hurt personal based um ETF passive investing and things like that.

[00:08:00]Because that was always underpinned by the fact you got the CGT at the at the end and you don't anymore. So, you're going to have to look elsewhere. Um it still will maintain in your CGT say in your super, uh that's protected. Um but yeah, then that long but that buy and hold strategy now is now very challenged by um you know, by the by the change in the tax rules and and um Yeah. And I I think >> and I you and I are not economists, so let's not talk about whether or not this is good or bad for young people, but let's talk about what you think it's going to do for equity investing.

[00:08:33]Because the Australian Shareholders Association is saying why would young people then invest in ETFs and things and get a deposit for a house because they're going to be hit by this CGT. But James Gerrish from Market Matters was saying, well, he thinks a lot of that money from property will go into the equity market. What do you think? I think they're both right. Yeah. Um I just think it's the way you do it. So, I mean, we do we do a particular product um product for aimed at sort of young investors trying to build for that. Um And it's done by a structured investment where you can control the CGT event um when it when it And there's a fair bit of leverage in there as well. Um and obviously the negative gearing is still um it's still applicable and we we use we use options to backstop it. So, that that reduces heavily reduces the risk.

[00:09:16]So, essentially that product we we custom built we've been selling for quite some time. So, yes, in that case, you you would steer back to um you would steer back to uh equity investing and I do think you know, property was so far out of the reach of younger generation, they were already turning to shares. Um but But do agree with the Shareholders Association. This is just going into one-to-one passive ETFs or that that buy and hold and time in the market theory that financial planners endlessly spin.

[00:09:47]Um that that is just wildly changed now because you haven't got policy supporting it. So, you're going to have to look to invest in a modern in a modern way. Not you know, that those those tactics of the past aren't going to work as effectively anymore. And um and you're just going to have to look for more innovative ways to do it. So, um so yeah, it'd be interesting I mean, we we've thankfully and you know, we weren't expecting this to be as aggressive as what it was, but many of the construction businesses we do took us out of banks and and we were less worried about franking credits, etc. Um and you know, and then trying to use that leverage to help people um to help people build that for those home deposits and things. So, we weren't really we weren't taking it wasn't part of our investment thesis anyway.

[00:10:33]So, um yeah, we've been fairly lucky before this has been good for in terms of the stuff that we're selling, but the um yeah, there will be a lot of planner and accountant conversations over the next 18 months and and you'll have and for the first time ever, you'll have to review you'll have to genuinely review your portfolio and you'll have to look at those old holdings like um CBA that everyone has or let them you know, the legacies and you'll have to size up whether they're a good investment. So, Yeah. Yeah, one of the first emails I got this morning was from my accountant. I think you're right.

[00:11:05]going to make a lot of money this year, aren't they?

[00:11:06]>> Oh yeah, we've we've spoken to quite a few today and um and because we've got a lot of relationships with accountants and and yeah, there there's there's going to be a lot of consults on the books. Best of luck to them. Mark, thank you as always. Mark Gardner there from MPC Markets. Didn't even get to US CPI, but um a lot to discuss and those really great charts that Mark um provided us as well of the winners and losers. Getting back to stock specifics, of course, CBA was the the stock of the day, Nadine spoke with Henry Jennings Marcus today and Andrew Waller from DP Wealth Advisory.

[00:11:42]Uh I don't know what effect tax changes are going to have on people's, you know, perception of this one because, you know, pre-1985, tax changes, all that sort of stuff. So, uh it's going to be interesting how it falls out, but from a stock price point of view, you know, it's taken a big big hit.

[00:11:58]And I think, you know, you probably should have sold it a little while ago.

[00:12:02]I I think it's not going to perform brilliantly, but having said that, you don't want to be uh throwing this one out on a bit of a panic. So, I would be holding this one for the time being, at least. C S L, copy all the C's that Henry was just referring to, they, these hedge funds, are just brutal and will just sell it. They'll stop it out immediately. So, I'd suggest there's probably a little bit of that going on as well. But, look, it's a hold for the time being. I think from a technical point of view, it's around that $148, $150 mark. If it can bounce off there, it's actually probably a buy.

[00:12:37]Uh but, at the moment, it's a hold.

[00:12:46]Well, 10 stocks picked by you two experts one hour Let's get to the companies that have been nominated by you.

[00:12:56]It's like a witch hunt over there.

[00:12:58]Everyone hates data centers.

[00:13:03]Just remember that most of their earnings are offshore, so there's no franking credits.

[00:13:15]The call is brought to you by Centuria, an ASX-listed property fund manager with $21 billion in assets under management.

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[00:13:34]All right, let's have a look at the leaders and laggards in today's session.

[00:13:38]Aristocrat there on its update rising by more than 13%. Also some good gains from Perenti Global, Generation Development, Alcoa, and Sandfire Resources. To the downside, I guess CBA is going to be there. There you go, down 10.4%. Temple & Webster 2 after its guidance missed market expectations.

[00:13:58]And poor old Westpac being dragged into it, too, by UBS saying that it, along with CBA, is uh one of the losers out of the big four banks on the back of the changes to negative gearing. All right, tonight whoops, no, we've got to do the small caps first. Felix Gold down uh up 20%. I and A up 12%. The small cap losers today, Helios, of course, um down by some 23%.

[00:14:22]We touched on that one earlier. All right, tonight USA core PPI core forecast, 0.3 of 1% month-on-month gain after 0.1 of 1% in the prior month. Um and the broader picture is meant to show us a reading of around half of 1%. We're also getting Eurozone first quarter unemployment, first quarter GDP, industrial production, and the ECB President Christine Lagarde will be speaking as well.

[00:14:46]Tomorrow, we have the Melbourne Institute inflation expectations, a couple of AGMs including Flight Centre and Ample, plus earnings from Xero and Brainchip out with its first half numbers. Let's recap where the market has finished the session, down 6/10 of 1% there. The S&P ASX 200 has finished lower by 40 points, half of 1%. 8,630.

[00:15:13]And we're basically back to where we were at the beginning of 2026. So, we are unchanged when you take it all the way back to January the 1st. Now, I touched on the fact that the Australian Shareholders Association says that the budget will penalize long-term investment and investors. I'm pleased to say that Rachel Waterhouse from the ASA will be joining me at 11:10 a.m.

[00:15:35]tomorrow Sydney time for her take on that. So, do be sure to tune in. But, of course, we're live from 9:45 a.m. Eastern. We'll see you then.