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Live. Good morning. Welcome 'Business Today' for Australian network. I'm Whitney program - commodities selloff,

US stocks drop on a big plunge in oil, silver

Australian banks looking to

focus - the European Union environment. And regional

pushes for a greater share growing Asian markets. stories coming up shortly. growing Asian markets. Those

First at the markets. The in a moment. Yesterday major

indices went in different directions. Australia's ASX indices went in different

200 added over a quarter of for a

Seng closed in the red,

dropping around 0.23%. another negative session. The

Dow Jones gave and in Europe trade was mostly negative, with the biggest loser, over 1%. the biggest loser, sliding by

Ip. Local trade will kick-start

the last session for the week soon. What should we watch?

Well, it's not looking to be a

share good day on the Australian

dramatic night in share market today. We saw a

session.

seeing in commodities will have markets. a big impact on the domestic

freefall, it will weigh on commodities freefall, it will weigh on our

assets. The Australian

not is down to 105 US cents now,

not looking like a good day at the open, down 35 points. If Japanese market else will be in focus.

holidays today, for the rest of markets to continue the trend

of consolidation to the end of

the week. In China, the Shanghai the week. In China, the

property stocks following more warnings China's housing market Hong is headed for a downturn. In region becoming a real risk. signs of the property in

Data shows a Data shows a sharp fall in

April transactions. April transactions. Developers

all expected to extend losses falling commodities will also today. So across the region,

be the key expecting be the key focus, markets not expecting a good day at all. Let's move on to the US now. How are sentiment earnings impacting investor was sentiment over there? There

overnight. Second-quarter profit rose by profit rose by 24% for Visa.

IAG suffered a loss from the

impact of Japan's earthquake.

General Motors announced a drop

in China added to negative sentiment in China sales, the bad results

added to negative sentiment on US markets. We saw panic

selling across the board.

Analysts are referring to what

happened yesterday as a

liquidation move. Also poor

economic data out, jobless

claims jumped again last week,

more than expected. It doesn't

look good for the payroll

numbers, out tonight. Looking in energy, chevron leading amongst sectors,

losses, falling 2%. Overall, a

dramatic day, US stocks tumbling tumbling against a backdrop of falling results of the ECB prices. Christine, how do the

impact trade in Europe? Well, results of the ECB meeting

they've indicated that interest

rates will remain on hold until after June. That's certainly surprised the market. Most

expected a rate hike. The market predicted - following market predicted - following a

rapid jump in inflation last

month to 2.8%, off the back we saw a reaction in the saw a reaction in the Euro. The Euro fell those remarks. We also saw a

fall in the bond market. Germany's two-year Germany's two-year Government

beyond yield fell 15 basis points. Lloyds reported a

quarterly loss. Its shares

tumbled 8%. Society General lost five %, missing

expectations. There was a bit

outperformed of good new, ad das

outperformed the market, jumped

over 7%. The sales of the

success. Overall, European Reebok shoes have been a

slump, thanks to falling markets hit by the global

markets down for the third day commodities. European stock

leave it in a row. Christine, we'll in a row. Christine, we'll

update. Thanks, leave it there, thanks for the

Whitney. Christine Ip from Bell update. Thanks,

Direct there. Let's take a closer look at what's happening

now. with currencies and commodities

A disappointing US jobs rise in the Greenback and fears A disappointing US jobs data,

of a growth slowdown combined to push the price of oil and other

other commodities lower. In

New York, West Texas crude tumbled

tumbled 8.6% to 99.80 It's the biggest daily price drop since drop since the 2008 financial

crisis, and there was an even bigger selloff in silver,

sliding more than 10%, its biggest one-day drop since 1980. Gold

1980. Gold was also dragged

lower by over 3%, as panic selling snow balled across selling snow balled across the commodities sector. Silver has

now lost 30% this now lost 30% this week, since it

it surged to a record high at around $50 an ounce last Thursday. Today's Senate

competition promises to be committee report

comprehensive and it may have

consequences for banking

revenue. That's the hint from its chairman at a conference in

tougher for banks, although NAB

has done better than most due to an profits are still coming, strategy. The big banking

profits are still coming, but

easily. We expected they're not coming quite as

we saw a increase we saw a one basis point the banks, and that the banks, and that was the banks, and that was on the

back of pretty modest increases 2.9% in lending asset growth, about really flat for business banking. The National Australia Bank was one of the bet performers. the half year was 2.4 billion, performers. The net profit for

up nearly 16%. Revenue rose almost 7%. Bad debt fell nearly 20%, while

a share. It demonstrates we've

set the right strategy set the right strategy for the group, that well against that strategy, we're improving our return in

equity and we've positioned our bank to compete sustainably in an unserp slower growth environment and analysts say cutting costs and help, but the banks

out of ryfrs. The out of ryfrs. The interesting question is what to five years out, particularly with Basel 3 rules coming in,

which will increase the level of capital

into ed to hold, and it's also in globally at least regulators and governments are looking for less risky and less risky and more stable banking banking businesses. Not to mention the prospect of global interest rates. The economy probably couldn't withstand an interest rate rise just at the moment, but, just at the moment, but, having said that, we are interest rate environment that will interest rate environment and didn't seem to worry the NAB chief, who's won

of the mortgage an aggressive campaign offering the lowest interest rates less fees. We're comfortable

with our mortgage delinkcys and

don't anticipate issues going forward. It's far forward. It's far more comprehensive I think a comprehensive I think a look than either the opposition, Government or Greens have

so far in what they might looking at. Quite some suggestion s consequences. Despite Australia's major Australia's major banks delivering analysts have highlighted that there are continuing

in maintaining this growth. issues the banking sector is

facing, I spoke earlier Andrew Dickinson, head banking at KPMG. Andrew

program. Thank you . Are you surprised surprised at all that Australia's banking I think they're up 8% - given the the volatile global backdrop? I I wouldn't say surprised. I think had fairly predictable results

in this period. Most of the increase has not come growth in the business but really from decreasing

of the increase in profits this

time around is as a result of reduced bad debt writoffs and collective bad debt

provisioning. So while the provisioning. So while the result is of it comes from things that really going forward. I think that will be the challenge for the banks, how they sustain the result going forward. That's an interesting it's not necessarily as a result of growth, so the challenges that the banks

into ed to tackle in order to boost their growth? That's right. The

have had very rapid growth in

balance sheets, the lending growth

growth in the economy, both business lending and lending to consumers around it's been very subdued.

Overall lending assets about an average of especially in an environment where banks are also

constrained in the margin s

they can charge such intense competition around fees as well. So there

a big challenge for a big challenge for them

getting growth going getting growth going forward and the all and the all the banks will look to increase market share

look at how they can offshore as well. Given they

are suffering flat margins and also a lack of business

spending and also a drop

strategies can practically speaking really get on top of

I think the primary focus I think the primary focus in

the next six or 12 months will be

be around costs. If topline growth managing the cost line to make sure they can growth. increases were very modest. They'll also They'll also look at ways they

can grow the top line. All the

banks are trying to do multi-brand strategy from Westpac, price competition from NAB or a super regional strategy in Asia from we take account as well, what sort of role

role do the account as well, what sort of role do the issues of the

sovereign debt in Europe and

also the measures that will also the measures that will be implemented under lickty and

capital rules, what direct

impact will that have on the Australian banking Australian banking sector It remains heavily dependent foreign whole sale funding

markets to fund their businesses, they still require

something north of $120 billion each year in the foreign

markets. Although the markets have settled down a little in

the last year or two, any further instability, particularly in Europe, will

continue to feed into

funding costs for Australian

banks, which isn't good news

for Australian borrowers. Other areas - It looks like that will happen, because

Europe isn't necessarily coming down any time soon A lot of uncertainty uncertainty in Europe, particularly around the

so-called pigs, Spain, Portugal

and Greece, and it seems likely

that volatility will remain in

those global funding markets

for some time to come. Looking

into the future, what's your

forecast for the second half of the year for the banks? It is

hard to tell. It really

depends on what happens in the glo ebbal

what happens in the growth in

the Australian economy as well,

the Australian banks are very

closely tied to the health of

the economy. We have seen a

bit of a softening I think in

the economy in the first

quarter, largely as a result of quarter, largely as a result of

the floods in Queensland and

the other natural disasters

we've seen. If that doesn't

pick up in the next six or 12

months, I think we'll see

months, I think we'll see increased impairments coming through and, as you mentioned,

potentially funding volatility as well. Andrew Dickinson, Thanks for joining the program. Pleasure, Whitney. As we heard, the European Central

Bank has left its benchmark interest rate at 1.25% and

signalled its next rise won't

be before July. ECB

be before July. ECB President

Jean-Claude Trishet did not use

the key phrase strong vigilance

at a news conference following the bank's decision to the bank's decision to leave rates on hold. ECB regularly used the fra iz

to signal a hike was only to signal a hike was only a months away. Mr Trishet did so

in March, a month before the Central Bank raised rates from

the record low 1%. He also

insisted Greece won't need insisted Greece won't need to restructure its debt as

restructure its debt as ECB Governors met after Portugal became the third Eurozone country to country to accept a bailout. Politicians will shall

thrashing out regional issues

at this weekend's ASEAN summit.

The European Union is the opportunity to push its

business credentials. Hundred

of business people have attended the first-ever and ationan. Helen reports from reports from Jakarta. It was a

sign of things to come, meetings. And welcoming it all

was the country that hopes to move ASEAN into move ASEAN into a global role. This business summit This business summit is timely for ASEAN as we make a final spring to achieve a true ASEAN community international companies talked

several industries, and billed

on the fact that the EU is the

biggest investor in the region. This is partly to be explained by historic by historic ties we have with the region. On the other hand, it that we had to wait until

to have this. Countries such as

Indonesia have become foreign business. However, protectionist policies such as tariffs We have to bring down barrier s, tariff barriers, s, tariff barriers, in order to attract more whatever the region is still very attractive. 600 million consumers class make it so. Two-week trade between Indonesia and Australia

billion in 2009/2010 and many believe that this can negotiations to strengthen this recently the Australian Chamber of Commerce and find out more about this, I spoke earlier to Peter Anderson, the Good morning, Whitney. Can you just tell us how just tell us how this agreement

will help pave the way for better flows

on both the Indonesian side the Australian side that our Asian economies need to trade

their way through their way through the lingering effects of the global financial crisis, not only for our

benefit but for our regional have started have started trade negotiations for an agreement, and we think it's very important that business organisations in Australia and in Indonesia get

behind that, get behind it just to support our governments, but on our own domestic and from an Australian end certainly can what sort of solid trade pact or what kind of context this take on? The agreement that we've reached with our Indonesia, the

Chamber of Commerce, known as CADIN, is an not only calls on us to also do work to also do work between our own business constituencies increase trade opportunities.

As you've said, our two-way

trade relationship currently

stands at about $9 billion, but

Indonesia is a country of 230

million people. It is industrialising. It has industrialising. It has a

strong appetite for goods and

services and many of those can

come from Australian

businesses. We only have have about

about 400 Australian businesses

in Indonesia at the moment. There's no reason why we be much more optimistic about

our capacity to engage in

higher levels of two-way trade

with Indonesia. It is one of our largest - I'll just break

in there. I'm just curious, what levels do you see two-way what levels do you see two-way

trade between Indonesia and

Australia can rise to? Well, currentsly it ranks about our

11th largest exporter and 13th

largest overall trading

partner. I'd like to see it

come into our top ten. There's no reason why

on our doorstep of 230 million people, which people, which is

industrialising, which is now providing some leadership

inside the ASEAN region,

become a very substantial trading partner for Australia

and for Australian goods and

services to expand into that

market. That's what we want

our governments to pursue and

we also recognise that the

private sector has some

responsibilities to make that

happen. Practically speaking, what benefit from this? Well, at

the moment a lot of our trade occurs still around agriculture, wheat, cattle, also aluminium. We'd like to see in particular our service industries expand their

capacity in the export market

that Indonesia presents. We

know that Australia has a know that Australia has a very

strong education system. We

already have a large number of Indonesian students here Indonesian students here in Australia. That is Australia. That is an important export market. But we also have the industry as Indonesia industrialises to take some of the skills from our the skills from our own construction services industries, engineering and the

like, and contribute to like, and contribute to the

growth of the Indonesian

economy. These types of

negotiations can be fraught

with, you know, certain agendas and also just political

minefields. How long do you

think it would take to get some

sort of solid agreement? Well, look, I think there

goodwill. What we've seen is our governments at the highest

levels commit to this

agreement. Just a couple of weeks ago in Jakarta our Trade

Ministers on both sides of the

relationship met in conjunction with our with our business organisations. Whilst there

are difficulties in any trade negotiation

negotiation because there is

give and take and mutual

understandings that need to be

reached, I'd like to think that the

the Australian private sector cannot only

those negotiations over a

course of a number of months

rather than years and no rather than years and no matter how long our governments

there are things

which don't rely having to conclude an agreement before we take having to conclude before we take the relationship further. All right, Anderson, we'll have to leave it there but thanks so much for joining the program. thank you.

are threatening to push tens prices across the Asia are threatening to push tens of millions of people deeper into poverty poverty and food inflation is also undermining also undermining nutrition, education and development. The poorest of the poor hit the hardest. hit the hardest. Global food prices have almost doubled in

maize, since June last year the prices of

have increased by more than combined with natural disasters and the weak US dollar mean food prices are spiralling out

that two-thirds of the world's poorest live in Asia, about 620

million people, and when you

think that they are spending,

many of them, as

even 80% of

income on food, even a small

shift in the cost of food is going to have on their ability to purchase

that food and then to their families. Aid agencies

say the poor have been forced say the poor have been forced to cut down on food they eat and eat less nutritious food because who

in the Pacific. Families don't have that backyard gardens or

and farming. So we're coping strategies. Those coping strategies. Those coping strategies or putting children to work so

they can afford to eat. don't take some urgent the situation will become even

organisations have proposed developing developing emergency food

reserves and working with

governments to ensure flow of food staples across increased presence of buyers from Asia among the for the biggest industry for the biggest industry event on Australia's fashion calendar. Australian export deals for local designers

designers have only just begun. Rachel Gilbert is one of the relatively few designers who crack Asia's highly diverse and resource-rich fashion market. It depends which market you are devastation in Japan at the moment, Japan's

style, so I'm a bit more high-end, luxury brand. high-end, luxury brand. So definitely the party the short party dresses are a

good one for me over there.

They seem to be They seem to be drawn to those. Her high-end

dresses appeal to the

several Asian boutiques. This

week she's met with key from major retail stores at

Rosemount Australian Fashion Week.

and is now premiere event. It provides key platform for designers to showcase their

whole sale collections to the and media to find out what's hot hot and what's not in fashion down Under.

As I mentioned before, we had Galeries Lafayette in yesterday for Indonesia, which is exciting. There is a lot of presence of the buyers here at the moment. So we've just the last few days, which is really exciting. In terms of quality, image, they need to look expensive and price is reasonable and affordable. There are collection shows over the

five-day program on site here

and offset also. The event

annually. Certainly Japan is

has been for the last couple of years. China is really obviously across many businesses, the emerging market obviously a destination for many, many years and continues to be strong, as well also Indonesia is a also Indonesia is a strong contender there as well. This

year there's been an of buyers snap up domestic challenges. I think the Australian dollars, it's so strong, that's why compared with US and compared this is one of also comparatively also comparatively well done with the Courtney Meyer from the label

Miss ungun is another Miss ungun is another young designer Asia. buyers as being different, buyers are looking buyers are looking for fashions that

highly competitive market. It's really

Asia the girls have this look that they like to be a bit feminine and then bring it into their own style with an edgy

look, which is really

to what we're about at Miss ungon. I want to buy something

knew different from the other markets, we travel all over the

world to see

Australia. The customers are willing to For most of the US and European brands, Australian competitive advantage. competitive advantage. So for some of currently working with, they brands to other brands. Australia's proximity

to Asia gives Australian labels an advantage and an advantage and with their

designs and pricing making them

retail buyers, they exports are set to expand. Now let's look let's look at what's making

headlines around the region. The Standard says commodities silver futures extending silver futures extending their biggest decline 1983. That's all for this edition of 'Business Today'. your day.

This Program is Captioned

Live. This morning, Papua New Guinea solution plans

to reopen a detention centre Manus Island. Just adopting a piecemeal way measures that the

former Government former Government implemented won't, in my view, send a won't, in my view, send a clear

message. Also on ABC News 24 -

jumps racing in the spotlight

again, following an incident

that left seven spectators in hospital. And Barack Obama

pauses to remember the victims

of September 11. When we say

we will never forget, we mean

what we say. A very good

morning. You're watching ABC