Sept 20 (Reuters) - Australian shares fell as much as 0.6 percent to their lowest in more than a week on Wednesday, with financials and material stocks pulling down the index.
The S&P/ASX 200 index fell 13.68 points, or 0.2 percent, to 5,699.9 at 0222 GMT, and was headed for a fifth session of losses in six. The benchmark fell 0.1 percent on Tuesday.
The “Big Four” banks fell in a range of 0.8 percent to 1.2 percent, after ANZ said in a note it sees the Reserve Bank of Australia tightening the cash rate by 50 basis points to 2 percent in 2018, reversing the rate cuts of 2016 and taking the real (inflation adjusted) cash rate back to zero.
Banks may be under pressure today as a result of the somewhat higher expectations around rate hikes next year based on the ANZ call, said Chris Weston, an institutional dealer with IG Markets.
“Even though raising the cash rate is good for their (banks’) margins in the long term, I think there is still a view that it could impact the psyche of the housing market which is so leveraged at the moment,” said Weston.
“Our confidence in looking for rate hikes in 2018 is boosted by the hawkish shift in the RBA’s language,” ANZ said.
Solid growth in employment was expected to continue, which would support household incomes and thus spending in the period ahead, minutes of the RBA’s September meeting showed.
Australia and New Zealand Banking Group Ltd reversed two sessions of gains to fall nearly 1.2 percent, while Commonwealth Bank of Australia and Westpac Banking Corp slipped to their lowest in more than a week.
In the materials sector, mining giant BHP Billiton dropped 1 percent to its lowest in four weeks and Rio Tinto fell 1.2 percent, after Chinese steel futures slipped to their weakest in almost a month, dragging down the price of iron ore.
Big telecom stocks reversed Tuesday’s gains with the index falling as much as 1.4 percent after a 1.2 percent rise in the previous session. Telstra Corp slipped 1.4 percent, while TPG Telecom plunged 6.9 percent.
New Zealand’s benchmark S&P/NZX 50 index rose 17.54 points, or 0.2 percent, to 7,782.07 at 0222 GMT.
Auckland International Airport Ltd rose as much as 2.2 percent, hitting a one-week high, while medical device maker Fisher & Paykel Healthcare Corporation Ltd broke a four-session losing streak to gain 1.2 percent. (Reporting by Chris Thomas in Bengaluru; Additional reporting by Aditya Soni; Editing by Eric Meijer)