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Australia shares rise on upbeat CBA; NZ down

Wednesday, August 9, 2017 - 11:55

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[BENGALURU] A rally in financial stocks led Australian shares higher on Wednesday, inspired by better-than-expected profit numbers from Commonwealth Bank of Australia, while large-cap material stocks also lent some support.

The S&P/ASX 200 index rose 30.95 points, or 0.5 per cent, to 5,774.7 at 0324 GMT. The benchmark fell 0.5 per cent on Tuesday.

Financial stocks accounted for nearly half the gains on the benchmark, with Commonwealth Bank of Australia climbing 1.4 per cent after its fiscal year profit beat expectations, helped by growth in its home lending arm and as expenses related to bad debts fell.

While the bottom line drove up the lender's shares, its reputation remained clouded by the ongoing fallout from breaches of anti money-laundering regulations.

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The allegations levelled by Austrac, the government's financial intelligence agency, have wiped billions of dollars from CBA's market capitalisation.

But the chances of CBA being handed a "really" big fine are quite small, said Christopher Conway, head of research and trading at the Australian Stock Report.

The bank will most likely get a slap on the wrist, costing it around A$10 million (S$10.79 million) to A$20 million, so investors may not be very worried, he added.

Shares of other banks in the "Big Four" banks rose in the range of 0.9 per cent to 1 per cent.

Miners added to gains on the index, with BHP Billiton and Rio Tinto notching increases of 0.8 per cent each. The Australian Metals and Mining Index rose 1.1 per cent.

While iron ore bounced back from a slip overnight, aluminium hit a 2-1/2 year peak above US$2,000 a tonne on Tuesday, lifted by growing concerns over supply cuts in top producer China and an upbeat assessment of China's demand growth prospects.

Shares of infant formula maker Bellamy's Australia surged to an eight-month high after Chinese authorities lifted a suspension on the company's recently acquired Camperdown canning facility.

Energy stocks fell on a dip in oil prices, with Origin Energy and Santos Ltd declining 1.9 per cent and 2 per cent, respectively.

Meanwhile, a survey showed a measure of Australian consumer sentiment slipped to its lowest in more than a year in August as worries over family finances swamped increasing optimism about the economic outlook.

New Zealand's benchmark S&P/NZX 50 index fell 22.4 points, or 0.3 per cent, to 7,760.32 at 0324 GMT.

Casino operator SkyCity Entertainment Group was the biggest drag on the index, dropping nearly 4.8 per cent to its lowest in four-and-a-half months after its fiscal full-year profit after tax fell 69.2 per cent.

REUTERS

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