Source : THE AGE NEWS
Australian shares have dipped following a sharp sell-off in the major banks, after disappointing earnings from their US counterparts highlighted the challenging backdrop for financial institutions.
The S&P/ASX200 fell 56 points on Wednesday, down 0.64 per cent, to 8727.9, as the broader All Ordinaries dropped 52.5 points, or 0.59 per cent, to 8869.
The heavyweight financials sector tumbled 1.6 per cent as the big four banks sold off, after US bank earnings failed to impress investors and a shareholder address from CommBank boss Matt Comyn noted a host of local and international economic headwinds. Commonwealth Bank slumped 2.2 per cent, National Australia Bank shed 1.8 per cent, Westpac fell 1.3 per cent and ANZ Bank slid0.2 per cent.
Underwhelming US bank profits had confirmed investor fears the big institutions were leaning into their equity books, while commercial lending, deal-making (for investment banks) and fixed income had been underperforming, Capital.com analyst Kyle Rodda said.
“They just haven’t really been as profitable, and they don’t look like they’ll be as profitable going forward,” he told AAP.
“While the composition of our banks is very different, if you see a lead like that from Wall Street, you basically see a sector-wide fall.”
Miners also sold off, with gold prices still under pressure from elevated bond yields and as iron ore futures continued to linger at two-year lows. Spot gold eased slightly to $US4158 ($5938) an ounce, dragging the sub-index almost two per cent into the red.
Copper advanced during the session, despite a sell-off in global chip stocks putting the AI narrative on shaky ground this week, but it wasn’t enough to support BHP or Rio Tinto, which dipped 0.7 per cent and 0.3 per cent respectively.
The energy sector advanced as oil prices held onto most of their recent gains, as tanker attacks in the Strait of Hormuz and fighting between Saudi forces and Houthi rebels continued to constrain crude outflows from the region.
Shares in oil and gas giants Woodside and Santos each jumped roughly 1.3 per cent.
Communications edged out energy as the best-performing sector, up 0.9 per cent as Telstra rebounded from a three-session slump.
The consumer-facing segments trimmed their earlier losses but still ended the day lower, with cyclicals trading just below flat and staples down 0.3 per cent.
In company news, uranium miner Paladin was the top-200’s worst performer, its shares plummeting more than nine per cent after production tumbled 19 per cent in the September quarter due to a shutdown and pit transition.
AGL plans to vigorously defend a class action alleging its carbon neutral products breached misleading or deceptive conduct standards.
The Australian dollar is buying 69.97 US cents, up from 69.77 US cents on Tuesday, the greenback easing after a Federal Reserve official tempered fears around the US interest rate outlook.
Overnight on Wall Street, the S&P 500 edged down by less than 0.1 per cent and pulled a bit further from its all-time high set last week. The Dow Jones Industrial Average fell 180 points, or 0.3 per cent, while the Nasdaq composite dipped 0.2 per cent.
The modest Wall Street moves masked some big swings happening underneath the market’s surface.
Goldman Sachs, for example, jumped more than 4 per cent at the start of trading after the bank delivered a profit for July through September that blew past analysts’ expectations. But its stock quickly erased all of it and then flipped between gains and losses before finishing with a dip of 0.2 per cent.
The firm benefited in the summer from strong growth for its business that offers loans to clients for trading stocks, among other things, even as chief executive David Solomon said it’s dealing with a “complicated operating environment” created by lots of uncertainty.
At the country’s biggest bank, JPMorgan Chase CEO Jamie Dimon highlighted “elevated asset prices” as one of the potential risks for the economy. He also mentioned high inflation, rising interest rates and “geopolitical conditions.”
“These forces may be manageable, but we remain prepared for a wide range of outcomes,” he said.
JPMorgan Chase’s stock flipped between gains and losses through the day before finishing with a drop of 0.9 per cent. It reported a weaker profit for the latest quarter than analysts expected, but it also gave a forecast for net interest income in the current quarter that topped Wall Street’s estimate.
