Australia: Shares end at near 2-month low, strong forecast lifts Westpac

AUSTRALIAN shares closed at their lowest in nearly 2 months on Monday (May 9), as Shanghai’s tightening Covid-19 curbs sparked worries about economic growth and a possible recession, while Westpac Banking jumped on an upbeat outlook.

The S&P/ASX 200 index ended 1.2 per cent lower at 7,120.60, marking a second straight session of losses.

In New Zealand, the benchmark S&P/NZX 50 index dropped 2 per cent to 11,381.70, its lowest since Aug 12, 2020.

Shanghai was tightening a city-wide Covid-19 lockdown imposed more than a month ago, prolonging into late-May an ordeal that China’s capital Beijing was desperate to avoid by turning mass testing into an almost daily routine.

Investors also remained concerned about aggressive policy tightening by global central banks, with a focus on US consumer prices data on May 11 to gauge further actions on interest rates by the Federal Reserve.

“I think (Philip) Lowe (the governor of the Reserve Bank of Australia) will only go by 25bps (basis points) at a time and we will get another rate rise in June, but the wage number will be all important,” Henry Jennings, senior analyst at Marcustoday Financial Newsletter said.

Among individual shares and stocks, Westpac Banking gained 3.2 per cent in its best day since Mar 10 after the country’s third-largest bank beat first-half earnings estimates and forecast lower expenses in the second half of the year.

The metals and mining index slipped 2.5 per cent, to their lowest level since Mar 17 on a slide in iron ore prices.

With China being the biggest customer to Australia, more lockdowns and a slowdown in the world’s second-largest economy is not great news, Jennings said.

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The mining trio BHP Group, Rio Tinto and Fortescue Metals Group dropped between 1.3 and 5.8 per cent.

Financials shed 0.3 per cent, with Australia and New Zealand Banking Group falling 2.7 per cent, while 2 of the “Big Four” banks capped losses to rise about 0.2 per cent.

Bucking the trend, energy stocks added 0.5 per cent. Woodside Petroleum and Santos rose 0.6 per cent and 0.4 per cent, respectively. REUTERS