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Australia shares drop as financials tumble, CBA woes persist; NZ market gains
September 8, 2017 / 3:07 AM / 2 months ago

Australia shares drop as financials tumble, CBA woes persist; NZ market gains

Sept 8 (Reuters) - Australian shares fell on Friday, dragged down by the energy and financial sectors, with Commonwealth Bank of Australia coming under renewed pressure as it struggled to shake off a money-laundering scandal that has shattered its reputation.

The S&P/ASX 200 index fell 0.4 percent, or 22.28 points, to 5,668.10 by 0305 GMT.

Financial and energy stocks accounted for nearly three-fourth of the losses with the financial index dropping 0.6 percent.

CBA was among the biggest drags on the index, falling 0.7 percent to A$73.45 by 0109 GMT.

In fresh troubles for nation’s biggest bank by market value, the Australian Prudential Regulation Authority (APRA) on Friday said it would dig deeper to look into whether CBA’s corporate structure had enabled a series of scandals that have hurt the bank’s reputation. The regulator also said it had the power to remove directors of CBA.

On Tuesday, CBA was slapped with a class action lawsuit over a money-laundering scandal. Last month, the bank was sued by financial intelligence agency AUSTRAC alleging breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act.

The rest of the “Big Four” banks followed suit, falling in the range of 0.5 percent to 0.8 percent.

The energy index was down 0.8 percent, as investors worried about another knock to oil prices due to hurricane Irma, coming on the heels of hurricane Harvey

“As we head into the end of the week, we are seeing a bit of profit-taking in the sector,” said Michael McCarthy, chief market strategist at CMC Markets.

Moving the other way, Australian gold index rose 0.5 percent as gold prices hit a fresh one-year high early on Friday, helping to offset concerns over a higher royalty payment.

Gold miners in Western Australia state are being hit with an increase in royalty payments under measures released on Thursday to help repair the state’s finances following the mining boom collapse.

“The increase of gold royalty is going to drag on the revenues of gold miners” said Tony Farnham, an economist at Patersons Securities.

The world’s second-biggest miner Rio Tinto rose 1.1 percent to its highest in over six months. On Thursday, the miner increased estimate of coal reserves to 185 million tonnes at its 80 percent owned Kestrel mine in Queensland.

BHP Billiton, which traded ex-dividend in the previous session, was up 0.7 percent.

New Zealand’s benchmark S&P/NZX 50 index was up 0.6 percent, or 44.27 points, at 7,847.51 by 0149 GMT.

Industrial and telecommunication stocks accounted for nearly half the gains on the index.

Auckland International Airport was up 3.7 percent and Spark New Zealand gained 1.6 percent.

Reporting by Chandini Monnappa in Bengaluru; additional reporting by Sumeet Gaikwad and Ambar Warrick; Editing by Shri Navaratnam

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