Investors continued selling the big four banks, with losses in the big four offsetting gains made by the retailers on a day where the Reserve Bank of Australia kept interest rates on hold.
A lift in both the iron ore and oil prices failed to motivate the resources sector, which was another poorly performing sector over the day, closing down just behind financials.
The big four banks have had a rough week following the announcement of a royal commission into the financial services industry last Thursday, however some investors believe they might have suffered enough.
“It looks like the banks are close to finding a base, there was some pretty lacklustre selling throughout Tuesday,” said Romano Sala Tenna, portfolio manager at Katana Asset Management.
“They look like they’ve run their course for the time being, we’ll have to wait for more news flow about the commission to seel them fall further, I would expect.”
The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each fell 0.2 per cent, to end the day at 5971 points and 6056 points, respectively.
Westpac fell 1.1 per cent to $30.83, ANZ lost 1 per cent to $28.05. CBA lost 0.2 per cent to $78.74 and NAB dipped 0.4 per cent to $29.36.
Investors look to have scooped some profits from resources giants BHP Billiton and Rio Tinto, which closed down 0.9 per cent to $27.75 and 2.1 per cent to $70.57, respectively.
Elsewhere, AWE Limited shares crashed 10 per cent to 63 cents after China Energy Reserve and Chemical Group Australia withdrew its 71 cent per share takeover offer.
The arrival of Amazon to Australia failed to stifle retailers who shot higher following stronger-than expected retail sales data for October.
Harvey Norman bumped up 6.3 per cent to $4.25 and JB Hi-Fi climbed 6.8 per cent to $25.73.
Telstra enjoyed a strong day, continuing its run after some positive broker comments on Monday. The stock closed up 3.1 per cent at $3.61.
In other equities news, G8 Education rebounded 5.3 per cent following Monday’s savage loss after a profit downgrade. Investors were buoyed by UBS and CLSA maintaining their “buy ratings” on the company.
REA Group dropped 2.5 per cent after Macquarie downgraded the stock to “underperform” on valuation grounds. Stockwatch
Magellan Financial Group rallied on Tuesday, rising 6.2 per cent to $26.72. The gain followed an upgrade to buy from neutral at UBS with a $30 target price. The broker said that whilst rising global equity markets and strong net flows suggest Magellan is on track for 15 per cent growth in assets under management in the first half of 2018, its shares have declined 13 per cent. The firm has underperformed the ASX 200 by 17 per cent, the broker noted. “With MFG trading at only 17.1 times forward earnings – a premium of only 6 per cent to the broader market compared to 26 per cent over the last three years, we upgrade MFG on valuation grounds.” Nickel
Nickel gained on Tuesday as the metal mainly used in stainless steel got a boost after Chinese steel futures touched three-month highs, but a firmer dollar capped the rise. Steel and iron ore contracts in Shanghai have surged as government-ordered steel production cutbacks to reduce pollution led to tighter supplies for some mill products. The stronger prices might not last long because eventually the steel production cutbacks during the peak Chinese smog season in the winter would mean less need for nickel, said Caroline Bain, chief commodities economist at Capital Economics. Benchmark nickel on the London Metal Exchange closed 0.8 per cent higher at $11,320 a tonne, paring gains after touching an intraday high of $11,470. New Zealand dollar
A speech from the Reserve Bank of New Zealand saw the kiwi dollar jump on Tuesday. A new assumption that global inflation will stay lower for longer means it is more exposed to the risk of prices picking up, said Acting Governor Grant Spencer. “More recently we have been assuming greater persistence in low global inflation and this is contributing to our current flat track for future OCR levels,” Spencer said in a speech Tuesday in Auckland. “This now puts some risk on the upside for inflation and interest rates.” The RBNZ currently sees the official cash rate remaining at a record-low 1.75 percent until mid-2019. New Zealand’s dollar rose after the speech, buying US68.95?? in Wellington from US68.65?? immediately before the speech was published. Asian shares
Shares around the region were mixed, after Japan’s Nikkei share average dropped on Tuesday while Singapore and Philippines shares rebounded. In Japan, semiconductor equipment manufacturers’ stocks were hit by weakness in US tech shares overnight. Singapore shares climbed 0.4 per cent after a survey showed late on Monday that factory activity rose for the 13th consecutive month in November to hit its highest level in eight years. Philippine shares snapped a five-day losing streak and inched up 0.3 per cent after data showed headline inflation slowed for the first time in five months to 3.3 percent, in line with forecasts. Oil
Oil markets nudged higher on Tuesday, buoyed by expectations of a drop in US crude stockpiles and after last week’s deal between OPEC and other crude producers to extend output curbs. Brent crude finished the day at $62.45 while West Texas intermediate was at $57.47 a barrel. The Organisation of the Petroleum Exporting Countries and non-OPEC producers last week rolled over their agreement to cut output by 1.8 million barrels per day until the end of 2018, aiming to erode a global glut and drive up prices. Goldman Sachs said Saudi Arabia and Russia showed a stronger commitment to extending cuts and raised its Brent and WTI spot forecasts for 2018.
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