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Posted: 2018-03-13 05:57:20

If the dividend franking plan is introduced "at the margin you're getting less of a kicker on Australian shares. You may look overseas or you may look at property, or high yielding global shares," he said. "Markets are trying to get to grips with that."

Companies such as Telstra are vulnerable to changes in the treatment of franking credits as the bulk of their earnings are in Australia, Mr Oliver noted. Telstra shares fell 0.9 per cent to $3.41.

Meanwhile, hearings in the Hayne royal commission into the financial services sector kicked off in earnest on Tuesday and CBA fell 0.4 per cent to $77.05, NAB lost 0.2 per cent to $30.35, ANZ declined 0.4 per cent to $28.49 and Westpac lost 0.2 per cent to $30.20.

The hearings will delve into the intricacies of the consumer credit law, the role of ASIC, and the application by banks of the industry code of conduct over the next few months.

Investors in the other heavyweight sector of the market - resource stocks - contended with a sharp drop in iron ore prices on Monday night.

BHP declined 0.8 per cent to $28.67, Rio Tinto shares fell 2 per cent to $74, South32 dropped 1.9 per cent to $3.18 and Fortescue Metals lost 2.9 per cent to $4.67.

Consumer staples companies also performed well, with dairy firm A2 rising 2.7 per cent to $13.06 and conglomerate Wesfarmers advancing 0.5 per cent to $40.97.

- With wires

Stockwatch

Newcrest shares fell another 1.9 per cent to $20.20 after falling on Monday after the gold miner told shareholders that a tailings dam failed at its Cadia gold mine in New South Wales. Macquarie analysts said that they have incorporated a six-week production stoppage into their forecasts after the news. That revised forecast has in turn reduced the broker's fiscal year 2018 gold and copper forecasts by 110koz and 10kt respectively. "Disposing of tails in either the southern dam or the old Cadia Hill pit could enable an earlier re-start, however the approvals process to achieve this is uncertain," the analysts said.

Iron ore

Iron ore fell 1.8 per cent overnight to trade below $US70 a tonne. That move took losses for the metal to 8.8 per cent over the past week and 9.9 per cent over the last month. CBA commodities analyst Vivek Dhar said that oversupply fears in China's steel market are driving the moves in iron ore. "Markets are worried that China's steel mills will struggle to clear its excess steel inventory, which has built up in anticipation for stronger demand during the construction season," the analyst said.

Business conditions

An index of Australian business conditions climbed to record highs in February as sales and profits increased sharply, leading to a marked improvement in already healthy employment conditions. The survey from National Australia Bank showed its index of business conditions climbed 3 points to 21 in February, far above the long-run average of 5 and the highest reading since the survey began in 1997. The survey's measure of profitability rose another 2 points to 21 in February, while its sales index climbed 3 points to 27.

Home loans

The number of home loan approvals for owner occupiers fell 1.1 per cent, beating market expectations for a 0.2 per cent fall. The value of total housing finance was up 0.7 per cent at $33.1 billion in January, seasonally-adjusted data from the Australian Bureau of Statistics showed. The value of new home loan approvals for owner-occupiers was up 0.5 per cent, while the value of investor loans was up 1.1 per cent.

Asia-Pacific

Asian equity traders adopted a cautious tone, with the focus turning to the US inflation report for clues on the pace of Federal Reserve policy tightening. The US inflation reading is the last major piece of data ahead of the Fed's policy meeting next week. Hong Kong equities dipped 0.2 per cent while South Korea Kospi edged up 0.2 per cent and the Shanghai Composite index slipped 0.2 per cent. Japan's Nikkei rose 0.5 per cent as political clouds continued to gather around Japanese Finance Minister Taro Aso.

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