February 6, 2019 / 1:29 AM / 5 months ago

Australia shares hampered by CBA's disappointing results, financials fall

* Financials tumble after CBA’s results miss estimates

* Mining stocks jump to near 7-year high as Vale SA declares force majeure

* Viva Energy posts best day ever after renewing deal with Coles Group

* CSL’s slump drags healthcare stocks

By Rashmi Ashok

Feb 6 (Reuters) - Australian shares edged up on Wednesday, though early enthusiasm evaporated after disappointing results from Commonwealth Bank of Australia provided a grim reminder of the pressure facing financials as regulators hit hard against misdeeds in the sector.

After a stellar performance in the previous session, financial stocks appeared to run out of steam, slipping over 1 percent.

The drop came after the country’s biggest lender Commonwealth Bank of Australia’s first-half profit missed expectations, a day after the Royal Commission’s final report on the sector.

The S&P/ASX 200 index added 0.1 percent or 6.8 points to 6012.70 by 0030 GMT, having rallied nearly 2 percent on Tuesday.

“CBA missed analysts estimates by about 5 percent, and the issues appear to be industry wide... they cited higher remediation costs, they also saw pressure on margins and overall lending fell,” said Michael McCarthy, chief market strategist at CMC Markets.

The Royal Commission report on finance-sector misconduct recommended dozens of rule changes for the industry, in order to tame the systemic greed and malpractice marring the industry. The months-long inquiry had led to a big selloff in the financial sector stocks last year.

Elsewhere, energy stocks slumped in early trade but later edged higher in tandem with oil prices which rose ahead of U.S. President Donald Trump’s State of the Union address, with investors looking for details on U.S. China trade talks in particular.

Top gainer on the sub-index was Viva Energy Group which surged to record its best ever performance after it renewed its fuel partnership with Coles Group till 2029, gaining the right to set fuel prices. The stock rose over 17 percent.

Mining stocks also turned up from early losses, rising nearly 1 percent to their highest level in nearly 7-years, with benchmark heavyweights BHP Group and rival Rio Tinto both recouping losses to edge up.

The uptick came on supply concerns after Brazilian miner Vale SA on Tuesday declared force majeure on some iron ore contracts after a court-ordered halt to a mine responsible for nearly 9 percent of its output following a dam burst.

In the healthcare sector, heavyweight CSL Ltd’s skidded 2.1 percent ahead of its results. Citing its strong share price performance over the last 2 years, McCarthy said CSL is vulnerable to any disappointment in the results.

New Zealand’s benchmark S&P/NZX 50 index was not trading on account of a holiday in the region. (Reporting by Rashmi Ashok in Bengaluru Editing by Shri Navaratnam)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below