MELBOURNE: Australian shares fell for a second day in a row Wednesday as banks again pulled back from recent gains after a lackluster earnings report from Australia & New Zealand Banking. A drop by materials stocks added to the day’s selloff, more than offsetting a recovery by oil and gas companies after the price of crude rebounded in Asian trading. The market closed at a two-year high Monday, as the big banks continued to rise in anticipation of first-half earnings reports from some of the country’s biggest lenders. Sentiment shifted Tuesday with ANZ results, which showed a deterioration in its net interest margin as it was squeezed by higher funding costs and heightened competition.
Extending the retreat, the S&P/ASX 200 lost 58.1 points, or 5892.3, to 5892.3. The four largest banks collectively knocked almost 33 points from the index and mining company BHP Billiton close to 6 points. For the session, 2.63 billion shares were traded with a value of 6.33 billion Australian dollars (US$4.77 billion), Commonwealth Securities said. The conclusion of the Federal Reserve’s policy meeting overnight isn’t expected to result in another increase in short-term U.S. rates, although the statement will be scrutinized by investors for insight into future rate moves as well as any further comment on shrinking the central bank’s balance sheet. After losing 2.1% on Tuesday, ANZ fell another 2.8% as analysts waded in on its half-year results and many trimmed earnings forecasts for the full year.
National Australia Bank, which is due to release its first-half numbers before the market opens Thursday, dropped 2.7%, Westpac Banking was 1.9% weaker and Commonwealth Bank of Australia was 1.7% lower. Among mining stocks, BHP Billiton declined 2.3% and Rio Tinto and Fortescue Metals Group each fell 1% after iron-ore futures retreated sharply from a recent rebound. The three companies are among the world’s biggest producers of the steelmaking ingredient. Vocus Communications sank 27% after its second profit warning in five months.
