CANBERRA: Australian shares continued their downward slide on Thursday, but in a sign the worst of the carnage may be over the big banks closed well off the day’s lows, as buyers tentatively stepped in.
The All Ordinaries dropped 0.8 per cent to 5645.1 and the S&P/ASX 200 also fell 0.8 per cent to 5645.7, following Wednesday’s 2.3 per cent plunge. The market is now back at its levels of early February.
Weighing on local sentiment was a selloff in global and local bond markets, which showed no signs of ebbing, with the yield on the local 10-year government bond jumping above 3 per cent for the first time since December.
The yield spiked after Australian employment data was released, indicating that traders interpret the numbers as not as bad as the headlines suggest. The economy lost 2900 jobs in April, instead of the expected 4000 gain, but last month’s already strong growth was revised up by 9400 to 48,100 new jobs, most of them full time.The data also pushed the dollar back briefly above US80¢.
Overnight the slide in bonds as well as comments by Federal Reserve chair Janet Yellen that US stock valuations were “quite high” pulled the Dow Jones down 0.5 per cent. From this weak lead Australian shares opened lower from the outset but rebounded a little as the day went on.
The banks had a better day following Wednesday’s disastrous slide in which 6 per cent was wiped off Commonwealth Bank following its earnings report.
“The banks earlier in the day had been really quite weak but as the day went on they turned around quite significantly,” said Morgans senior client advisor Bill Chatterton. “Commonwealth Bank had a massive turnaround, Westpac’s the same.”
NAB reported cash earnings of $3.32 billion, which was up 5.4 per cent on consensus estimates, and an interim dividend of 99¢ per share fully franked. The bank also announced it would raise around $5.5 billion in a rights issue and outlined a proposal to demerge its troubled UK bank, Clydesdale. NAB shares were placed in a trading halt until the institutional component of the capital raising is conducted.
Among the other banks, Commonwealth Bank limped up 0.15 per cent to $83.11 following Wednesday’s shocker. ANZ lost 0.6 per cent to $33.01 and Westpac shed 0.2 per cent to $33.90.
Fellow higher-yielding blue-chip Telstra had a weaker day, dropping 1.2 per cent to $6.15.
AMP announced at its annual meeting that assets under management have risen 6 per cent in the three months to March 31 to $116.1 billion and that its life insurance business is performing in line with expectations. Shares in the insurance giant fell 0.9 per cent to $6.33.
Iron ore rebounded above $US60 a tonne for the first time since early March, after logging a nearly 4 per cent gain on Wednesday. However, BHP slipped 1.4 per cent to $31.89 and Rio Tinto shed 1 per cent to $58.54, while Fortescue ended flat at $2.58.
Struggling third-ranked supermarket company Metcash announced it was proceeding with its second job-cutting program in two months as its shares hit a 14-year-low.
The job losses come after the country’s largest supermarket chain Woolworths on Wednesday confirmed it would slash an additional 400 jobs on top of 400 recently shed.
Metcash shares slumped to $1.24, down 3.8 per cent today and their lowest level since 2001 amid concern about retail spending.
Woolworths fell a further 2 per cent to $27.57 following Wednesday’s poor earnings result and sell-off. Competitor Wesfarmers lost 1.2 per cent to $43.80.
Shares in JB Hi-Fi lifted 1.7 per cent to $19.25 after the electronics and appliance retailer reaffirmed its full-year guidance and reported strong growth in the March quarter despite continued challenges in New Zealand.
Caltex Australia told its annual meeting it was putting growth as its number one priority after completing the conversion of its Sydney refinery into a fuel import terminal and completing a $4.73 billion exit from its share register of US energy giant Chevron in March. Caltex shares finished down 1.1 per cent to $34.
