Australia: Shares trapped, NZ stocks edge lower

[SYDNEY] Australian shares moved sideways on Tuesday as gains in the energy and natural resources sectors were offset by weakness in financials and discretionary stocks in another busy week of earnings reporting.

The S&P/ASX 200 index edged off 4.1 points or 0.1 per cent to 5,536.2 by 02:54 GMT, but remained close to a peak of 5,611.2 touched earlier this month. It has gained 4.5 per cent so far this year, largely due to falling interest rates at home and low returns on bank deposits.

"With bond yields continuing at record lows, the comparatively higher yields on offer in equities are likely to continue to see support for the index," said Angus Nicholson, a market analyst at IG.

He said the biggest domestic risk could be the possibility that further RBA rate cuts could see sentiment begin to turn on the banks.

Share in Australian banks, which account for around a third of the benchmark's weighting, have already dropped between 5 per cent and 11 per cent this year. IG's Nicholson said lower interest rates would further erode the banks' net interest margins and possibly affect their dividends.

Markets are pricing in a 50-50 chance of another easing this year by the Reserve Bank of Australia following its August cut to a record low 1.5 per cent.

Among the largest financial institutions, National Australia Bank led losses with a drop of 1 per cent, followed by ANZ Bank, off 0.5 per cent. Commonwealth Bank of Australia edged down 0.1 per cent, while Westpac Banking Corp gained 0.25 per cent.

G8 Education was the red lantern, down 16 per cent after it reported a fall in profits.

But resources stocks rose, underpinned by firmer commodity and oil prices.

BHP Billiton gained 0.5 per cent, while spin-off South32 bounced 1.2 per cent. BHP rival Rio Tinto edged up 0.2 while iron ore producer Fortescue Metals Group added 2.2 per cent.

Whitehaven Coal, WorleyParsons and Santos jumped between 2.5 per cent and 3.8 per cent.

New Zealand's benchmark S&P/NZX 50 index fell 0.1 per cent or 9.57 points to 7,378.78 as investors digested company earnings reports.

Heartland Bank was up 0.7 per cent after reporting a rise in its full year net profit. Summerset also continued to ride a wave of solid earnings, up 1.4 per cent.

In the other direction, Fletcher Building was down 1.6 per cent. The building company is due to report on Wednesday.

REUTERS