the spasx 200 falls again as bank shares plunge 2571352015
The RBA will conduct its board meeting today.
The Australian share market fell again on Monday, dragged by a sharp fall in the stocks of major banks and consumer retailers, and reflecting investors’ concerns on the outcome of the RBA’s board meeting scheduled for Tuesday (November 3).
The benchmark S&P/ASX 200 headed south right out of the gate yesterday and continued its downtrend till approximately 1 PM, and thereafter remained locked in a sideways range till the session close.
Indices and sectors
The benchmark S&P/ASX 200 fell 73.6 points, or 1.4 per cent, and closed at 5,165.8, while the broader All Ordinaries index was down 67.3 points, or 1.3 per cent, at 5,221.3.
Not a single sector could end in positive territory in the market wide sell-off. The top sector losers included financials (-1.95 per cent), telecom (-1.62 per cent), consumer staples (-1.42 per cent), health care (-1.21 per cent), materials (-0.84 per cent) and consumer discretionary (-0.83 per cent).
Stocks
The ‘big four’ banks continued their slide, with three losing over 2 per cent. Westpac Banking Corp (ASX:WBC) was down 2.45 per cent to AU$30.61, Commonwealth Bank of Australia (ASX:CBA) gave up 2.12 per cent to AU$75.10, Australia and New Zealand Banking Group (ASX:ANZ) slipped 2.32 per cent to AU$26.58 and National Australia Bank Ltd. (ASX:NAB) lost 1.76 per cent to end at AU$29.62.
According to Westpac chief executive Brian Hartzer, the country’s banks will suffer from modest credit growth, heightened competition and regulatory uncertainty in the near future, the ABC reported.
Excepting Santos Ltd (ASX:STO), which gained 1.88 per cent, the other major energy counters ended in the red. Origin Energy Ltd (ASX:ORG) lost 2.73 per cent to AU$5.35, Oil Search Limited (ASX:OSH) fell 0.76 per cent to AU$7.79 and Woodside Petroleum Limited (ASX:WPL) was down 0.03 per cent to AU$29.60. Santos was bid up by investors after it closed on a transaction to sell an oilfield.
Mining had a somewhat mixed day. While Rio Tinto Limited (ASX:RIO) and Fortescue Metals Group Limited (ASX:FMG) ended higher by 0.22 per cent and 1.44 per cent respectively, BHP Billiton Limited (ASX:BHP) lost nearly 1 per cent to close at AU$22.80, and BC Iron Limited (ASX:BCI) fell 3.7 per cent to AU$0.26.
Investors’ jitters regarding the prospects for the country’s grocers reflected in the sharp cuts in their share prices. Woolworths Limited (ASX:WOW) was down over 2 per cent to AU$23.67, Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, fell 1.27 per cent to AU$38.91, Myer Holdings Ltd (ASX:MYR) plunged 2.60 per cent to AU$0.94 and Metcash Limited (ASX:MTS) lost 1.26 per cent to AU$1.18.
Economic news, currency and market outlook
According to the TD Securities Melbourne Institute Monthly Inflation Gauge, consumer prices remained relatively flat in October. The annual rate of inflation for October remained at 1.8 per cent, the same as September, and well below the RBA’s targeted range of 2-3 per cent, the ABC reported. "What we observed this month is that we had just as many price rises as falls, so net-net no change in the cost of living heading into the fourth quarter," commented Annette Beacher, chief Asia-Pacific macro strategist at TD Securities.
Data from CoreLogic RP showed that its Home Value Index of Australian capital city prices declined 0.2 per cent during October. While prices in Adelaide and Canberra rose 1.5 per cent each, in Perth and Brisbane home values fell 2.8 per cent and 0.2 per cent respectively, the ABC said. Interestingly, the data showed that Melbourne has been outperforming Sydney over the past three months. "Values are still rising, but not quite at the same pace as what we were seeing previously," said CoreLogic research director Tim Lawless, pointing to higher mortgage rates, new home supply and low rental yields as the factors responsible.
The Reserve Bank of Australia will conduct its monetary policy meeting today, and all eyes are focused on whether it will decide to cut rates, given that the country’s four major banks have independently hiked their interest rates on home loans. According to analysts, even if the RBA does cut rates, there is no certainty that the benefit would be passed on to borrowers by the banks.
Latest figures from the RBA show that three out of 10 new owner-occupier loans are of the “interest-only” kind, according to news.com. These are people who are failing to pay down their mortgages.
On Wall Street Monday, stocks ended higher across all sectors, particularly in the energy group and the healthcare industry. The Dow Jones Industrial Average rose 165.22 points, or 0.94 percent, to 17,828.76, the S&P 500 gained 24.69 points, or 1.19 percent, to 2,104.05 and the Nasdaq Composite added 73.40 points, or 1.45 percent, to 5,127.15. The Nasdaq 100 closed at its highest level in more than 15 years, Reuters said.
The Australian dollar is trading lower on the back of declining commodities prices and the markets’ preoccupation with the RBA’s monetary policy meeting scheduled for tomorrow. At 7am (AEDT), the currency was trading at 71.36 US cents, down from 71.40 US cents on Monday, according to the Business Spectator.
The Australian stock market is likely to open higher given that at 07:59 am today (AEDT) the December ASX SPI200 Index (AP) Future contract was up 62 points to 5192.
