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Banks and insurers drag market lower

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Published on: Wednesday, September 06, 2017

The share market has lost ground due to a broad sell-off of banks, insurers and other financial stocks, and the Australian dollar’s surge above 80 US cents was tempered by slightly weaker than expected economic growth.

The benchmark S&P/ASX200 index dropped 0.29 per cent to 5,689.7 points, as the financial sector’s fall outweighed gains by mining and oil producers.

Commsec analyst Steven Daghlian said the financial sector, led by the big four banks, has now fallen two per cent in the first week of September, on top of the three per cent shed in August.

“The major banks continue to weigh on the market, they failed to shoot the lights out again today, while in the neighbouring insurance space there are a few stocks trading ex-dividend placing broader pressure on the sector as a whole,” Mr Daghlian said.

Commonwealth Bank was again the weakest of the banks, down 1.2 per cent, Westpac shed 1.1 per cent, National Australia Bank dropped 0.7 per cent ANZ was 0.5 per cent weaker.

Insurer IAG was trading ex-dividend and lost 3.9 per cent to $6.20, while Medibank Private fell two per cent to $3.00, QBE also fell two per cent to $10.10 and Suncorp was 2.1 per cent weaker at $12.53.

After the price of oil rose as demand for crude was encouraged by US oil refineries coming back online following Hurricane Harvey, the energy sector was higher.

Origin Energy gained 0.8 per cent, Oil Search added 1.7 per cent and Santos was 2.4 per cent higher.

“The best performing areas of the market have been the defensive stocks, with gold miners ahead and the price of iron ore edging higher overnight,” Mr Daghlian said.

BHP overcame an early fall to add 0.4 per cent to $27.73, Rio Tinto gained 0.2 per cent to $68.25 and Fortescue Metals was 0.5 per cent stronger at $5.96.

Gold miner Newcrest’s gains evaporated in late trade, and it ended 0.04 per cent higher to $23.49.

The Australian dollar hit 80.28 US cents overnight but fell back below 80 US cents after the release of the June quarter gross domestic product figures, which showed slightly weaker than expected economic growth of 0.8 per cent in the quarter, and 1.8 per cent annual growth.

ON THE ASX:

* The benchmark S&P/ASX200 dropped 16.5 points, or 0.29 per cent, to 5,689.7 points.

* The broader All Ordinaries index shed 14.9 points, or 0.26 per cent, to 5,752.9 points.

* The September SPI200 futures contract was down 18 points, or 0.32 per cent, at 5,674 points.

* National turnover was 2.9 billion securities traded worth $6.1 billion.

CURRENCY SNAPSHOT AT 1700 AEST:

One Australian dollar buys:

* 79.81 US cents, from 79.75 US cents on Tuesday

* 86.73 Japanese yen, from 87.17 yen

* 66.94 euro cents, from 67.00 euro cents

* 61.29 British pence, from 61.68 pence

* 110.49 NZ cents, from 111.18 NZ cents

GOLD:

The spot price of gold in Sydney at 1700 AEST was $US1,338.04 per fine ounce, up from $US1,335.46 per fine ounce on Tuesday.

BOND SNAPSHOT AT 1630 AEST:

* CGS 4.20 per cent April 2020, 1.8865pct, from 1.9371pct on Tuesday

* CGS 4.75pct April 2027, 2.5463pct, from 2.6231pct

Sydney Futures Exchange prices:

* September 2017 10-year bond futures contract at 97.405 (implying a yield of 2.595pct), from 97.33 (2.67pct) on Tuesday

* September 2017 3-year bond futures contract at 98.03 (1.97pct), from 97.98 (2.02pct).

(*Bond market closes taken at 1630 AEST previous local session; currency closes taken from 1700 AEST previous local session)


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