MELBOURNE: Australian shares recovered from early weakness to finish Wednesday higher, reversing from the previous day’s drop. The major banks trimmed losses earlier in the session as investors digested the federal budget and plans for a levy on the biggest lenders’ liabilities, while regional banks rallied and infrastructure-related companies advanced in the wake of Canberra’s spending plans. Amid broad gains, the S&P/ASX 200 rose 35.5 points, or 0.6%, to 5875.4. For the day, 2.64 billion shares valued at 8.39 billion Australian dollars (US$6.16 billion) were traded, Commonwealth Securities said.
The budget, released after the market closed Tuesday, included plans for A$75 billion in infrastructure spending over the next decade on a new airport in Sydney and a high-speed rail corridor, among other projects. It also confirmed a levy on the liabilities of the five largest banks, aimed at raising A$6.2 billion over four years. Ahead of the confirmation, speculation about the levy weighed heavily on banking stocks as analysts estimated it would cut as much as 6% from annual earnings. Bank executives on Wednesday criticized what they said was a revenue grab, and warned that the tax would ultimately hit shareholders and borrowers.
Commonwealth Bank of Australia pared losses to finish 0.4% lower, and Westpac Banking and National Australia Bank each lost 0.7%. Australia & New Zealand Banking rose 0.8%, while Macquarie lost 0.6%. Regional lenders Suncorp, Bendigo & Adelaide Bank and Bank of Queensland rose between 2.8% and 3.9%, rebounding from Tuesday’s losses. Among the miners, BHP Billiton and Rio Tinto gained 1.5% and 2.1%, respectively. However, South32 fell 2.6% after warning it would miss a target for annual coal production. Woodside Petroleum rose 0.7%, Oil Search added 0.1% and Santos was steady. News Corp., which owns the publisher of The Wall Street Journal and Dow Jones Newswires, climbed 3.2% after it narrowed its losses in the March quarter and recorded better-than-expected revenue for the period.
