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Market report: Banks drag down market

Markets

The Australian share market is lower, dragged down by poor bank earnings results.

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Chris Weston from IG said overnight gains on the Dow Jones and Nasdaq had failed to stoke local investor confidence, as ANZ reported a 24.3 per cent drop in first-half cash profit result and cut its interim dividend.

Westpac also disappointed investors on Monday, lifting first-half profit by just 3.3 per cent.

“I think, overall, the market is pretty concerned about some of the trends we’re seeing in the (ANZ) bank,” Weston said.

“Banks have taken a few points out, and they’re guiding the way today.”

The market reacted poorly to ANZ’s results, with bank’s stocks dipping 0.51 per cent to $23.61 at 1017 AEST.

Elsewhere, Westpac fell 0.97 per cent to $29.66, NAB dropped 0.68 per cent to $26.45 and the Commonwealth Bank was down 0.24 per cent to $72.17 per cent.

Energy resources also performed poorly in the early morning trade on the back of a 3.1 per cent fall in oil prices overnight.

Increased oil production from OPEC countries flooded the market with additional supply.

Origin Energy fell 1.85 per cent, Santos declined 1.48 per cent and Woodside Petroleum slipped 0.94 per cent.

Mining giants Rio Tinto and BHP Billiton also experienced a poor morning, falling by 1.11 and 2.2 per cent, respectively.

Weston said investors would have already insulated themselves from the effect of any possible interest rate change on Tuesday.

“I’d like to say it’s a binary event but I don’t think it’s a binary event,” he said.

“I think people have already pre-positioned their portfolio; the interest rate market is giving it a 50-50 outcome.

“I don’t see a major reaction in the equity market.”

Weston also said Tuesday evening’s federal budget had a negligible impact on the day’s bourse.

The benchmark S&P/ASX200 was down 0.32 per cent at 1017 AEST, while the All Ords was down 0.27 per cent.

KEY FACTS:

* At 1017 AEST, the benchmark S&P/ASX200 index was down 16.5 points, or 0.32 per cent, at 5226.4 points.

* The broader All Ordinaries index was down 14.4 points, or 0.27 per cent, at 5297.6 points.

* The June share price index futures contract was down 9 points at 5214 points, with 9368 contracts traded.

* National turnover was 342 million securities traded, worth $476 million.

AAP

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