Australia Stocks Fall for Third Straight Session
April 27 2016 - 3:56AM
Dow Jones News
By Robb M. Stewart
MELBOURNE--Australian shares were led lower in late trading
Wednesday by banks amid heightened uncertainty over interest
rates.
The market opened modestly higher in the wake of an overnight
recovery in oil prices, then built on gains to peak about midday
following the release of data showing the first quarter of domestic
deflation since the global financial crisis. That turned to selling
as analysts reflected on the increased likelihood the Reserve Bank
of Australia would next week lower interest rates, faced with the
risk that inflation will undershoot its 2%-3% target for a
sustained period.
Falling for a third straight session, the S&P/ASX 200 lost
32.9 points, or 0.6%, to end at 5187.7. After helping push the
market higher early in the day, the financial sector finished down
1.2%.
Analysts said there is a high degree of uncertainty dogging
equity markets amid U.S. earnings season and ahead of the U.S.
Federal Reserve's monetary policy update. The Fed isn't expected to
raise interest rates on Wednesday but may offer clues as to whether
it will act in June. Australia's largest banks, which account for a
big chunk of the ASX 200's value, are also due to turn in their
earnings reports from Monday.
Australian consumer prices fell 0.2% in the first three months
of this year and were up 1.3% from a year earlier, the Australian
Bureau of Statistics said Wednesday. Economists had expected
consumer prices to rise 0.2% in the quarter and 1.7% from a year
earlier.
"While we don't think there is a screaming need for interest
rates to be cut on economic activity grounds, the low inflation
result opens the door for the Reserve Bank to cut rates if they
deem it is necessary," Commonwealth Securities economist Savanth
Sebastian said.
Commonwealth Bank of Australia led the big banks lower, falling
2.5%. National Australia Bank Ltd. was 2.2% lower, Westpac Banking
Corp. lost 2% and Australia & New Zealand Banking Group Ltd.
shed 1.5%. Regional banks Bendigo & Adelaide Ltd. and Bank of
Queensland Ltd. slipped 1.4% and 2.5%, respectively.
"Next week's bank profit reports are now close enough to keep
investors cautious," CMC Markets chief market analyst Ric Spooner
said. "Markets are waiting for clarity on bank bad debt provisions
and whether interest margins have been sustained in the face of
increased competition."
Among mining stocks, BHP Billiton Ltd. lost 0.6% while fellow
iron-ore producers Rio Tinto Ltd. and Fortescue Metals Group Ltd.
fell 2.1% and 2.9%.
Woodside Petroleum Ltd. dropped 2.8% but Santos Ltd. gained 2%
and Origin Energy Ltd. added 2.1%.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
April 27, 2016 03:41 ET (07:41 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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