Australia shares pinned by banking sector as govt inquiry begins; NZ down

[BENGALURU] Australian shares lost 0.3 per cent on Monday, dragged down by financials as a government-led inquiry into the scandal-hit banking sector's selling tactics got underway.

The benchmark S&P/ASX 200 index recovered some losses to finish the session 0.3 per cent or 17.3 points lower at 5,820.7 - its weakest close since October 13. It slipped 0.9 per cent on Friday.

Investors are also watching out for US January inflation data due later in the week as it comes amid a backdrop of growing anxiety in markets which have been roiled by the prospect of higher prices and interest rates.

On Wall Street, the S&P 500 Index recorded its worst week in two years.

In Sydney, the market was pinned down by the "Big Four" banks, falling between 0.5 and 0.8 per cent. Westpac Banking Corp and Australia and New Zealand Banking Group declined 0.7 per cent each for their weakest close since June 2017.

The losses came as a government-backed inquiry into Australia's finance sector on Monday said it will start its year-long investigation by scrutinising the selling tactics of banks' most lucrative products - mortgages. The banking sector has been rocked by scandals including interest rate rigging and alleged money laundering. The Royal Commission's final recommendations could lead to criminal or civil prosecutions as well as greater regulation, just as the banks are dealing with a revenue crunch following years of record profits.

Electronics retailer JB Hi-Fi was the biggest loser on the index with an 8 per cent drop. The company posted a record first-half profit, but warned that earnings growth would slow amid fierce competition.

Mining stocks helped cushion the index's fall, supported by a recovery in oil and copper prices.

BHP Billiton and Rio Tinto rose 1.5 per cent each, while South32 Ltd climbed 2.7 per cent.

New Zealand's benchmark S&P/NZX 50 index fell 0.4 per cent or 33.31 points to finish the session at 8,059.06, its lowest close since mid-November.

It was the fifth straight session of losses for the index, led by declines for healthcare and industrial stocks.

Fisher & Paykel Healthcare Corporation Ltd slipped 2.1 per cent to close at its weakest level since Sept 20, 2017, while Ryman Healthcare Ltd dropped 1.9 per cent.

REUTERS