December 5, 2017 / 12:59 AM / in a year

Australia shares dragged back by banks; NZ down

Dec 5 (Reuters) - Australian shares fell slightly on Tuesday with financials leading losses, on relatively weak sentiment from Wall Street, and ahead of Reserve Bank of Australia policy review that is expected to leave interest rates unchanged at a record low.

“There isn’t much buying in the market, so people are just increasing cash levels, perhaps locking a bit of performance ahead of the calendar year end,” said Chris Weston, Istitutional Lender at IG Markets.

The S&P/ASX 200 index hit its lowest in two weeks, inching 1.787 points, or 0.03 percent, lower to 5,983.9 by 0036 GMT in thin trade.

Overnight, U.S. stocks were a mixed bag with the Dow Jones Industrial Average hitting an all-time high, while the Nasdaq Composite Index fell 1.1 percent, and the S&P 500 making a record high before ending the session 0.11 percent lower.

On the home front, Australia’s central bank is seen as certain to keep its benchmark interest rates at a record low of 1.5 percent, according to a Reuters poll.

The RBA eased twice last year but has since held steady as it balances the risk of fuelling further borrowing in the country’s red-hot property market against tepid inflation.

For the day, the ‘Big four’ banks were the biggest drags on the benchmark index, losing between 0.1 percent and 0.5 percent.

“I think in Australia no one is really buying banks at the moment as there is a royal commission on the banks and that is keeping the buyers away.” Weston added.

The Australian government is holding a wide-ranging inquiry into a scandal-hit finance sector, arguing one was needed to restore public confidence as it reversed its long-held opposition amid mounting political pressure.

Lithium miner Orocobre was the worst performer, down 4.4 percent.

Miner BHP Billiton lost 0.7 percent, hurt further by an overnight downturn in oil prices, while Rio Tinto fell 1.2 percent.

Tech stocks mirrored their U.S. counterparts, with the local tech index down 0.6 percent as REA Group fell 2.7 percent.

On the upside, miner South32 was among the top performers on the benchmark index, up 4.6 percent.

The company on Tuesday announced that it expects capital expenditure in fiscal 2018 to be about $470 million, below its previous forecast of $500 million, and reaffirmed its production guidance for all of its operations in fiscal 2018.

Telstra extended gains, hitting its highest in seven weeks, up as much as 2.6 percent, while Woodside Petroleum added 0.7 percent.

New Zealand’s benchmark S&P/NZX 50 index edged 0.12 percent, or 9.7 points, lower to 8,175.17.

Fletcher Building was the top gainer on the benchmark, up 0.9 percent, while a2 Milk fell 1.3 percent.

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Reporting by Susan Mathew in Bengaluru; additional reporting by Sumeet Gaikwad; Editing by Simon Cameron-Moore

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