Sharemarket falls over 1% as global volatility continues: Midday Roundup

The Australian sharemarket has opened more than 1% lower this morning after a disappointing night in Europe, where bank shares hit a 29-month low after the US Government announced it will be suing many of the world’s largest banks over selling mortgage securities during the financial crisis.

Some of the banks included were JP Morgan Chase, Goldman Sachs and Bank of America. The US market was closed for Labor Day overnight.

Back home the benchmark S&P/ASX200 index was down 1.26% to 4089.8 at 12.00 AEST, while the Australian dollar lost some ground to $US1.05c.

AMP shares lost 1.9% to $4.13, while Commonwealth Bank shares lost 0.63% to $46.10. ANZ lost 0.77% to $19.26 as NAB fell 1.93% to $22.33.

The market is expecting the central bank to keep rates steady this afternoon.

Housing finance lifts, but misses expectations

Home loan numbers and values increased in July, although the figures disappointed economists.

According to housing finance figures from the Australian Bureau of Statistics, the number of commitments for owner-occupied housing finance rose by 1%. Economists had tipped a 1.5% rise.

The ABS said the total value of dwelling finance commitments excluding alterations and additions rose by 1.6%.

Current account deficit falls

Separately, Australia’s current account deficit fell 33% in the June quarter to $7.4 billion, versus market expectations for a $7.1 billion deficit.

The ABS says the net goods and services deficit lifted $1.6 billion or 19% to $10.2 billion over the quarter, which is likely to slash 0.5 percentage points from growth in the June quarter volume measure of gross domestic product.

NAB in merger talks 

National Australia Bank is in talks with British investment group NBNK Investments over a possible merger, the Daily Telegraph has reported.

A merger between the two companies could result in one of Britain’s largest banking and investment groups.

It is reported that NAB’s discussions are related to separate bids for some of Lloyd’s Banking Group branches that it must sell. It said in July it would not bid for these branches despite holding discussions about the matter, reports indicate.