Australian shares slip as RBA decision looms, NAB posts profit miss

AUSTRALIAN shares drifted lower on Monday ahead of the central bank’s policy decision, while an earnings miss from top business lender NAB dented market sentiment.

The S&P/ASX 200 index closed 0.4 per cent lower at 8,697.10, after losing 0.7 per cent last week.

NAB posted a miss in half-year cash earnings, warning of an uncertain asset-quality outlook as the Iran war ripples through the economy.

The lender’s shares dropped 1.2 per cent to their lowest since Aug 18, dragging financials 0.1 per cent lower.

Three of the so-called big four banks have now raised provisions to account for potential losses linked to the Iran war.

These provisioning signals point to an early turn in the credit cycle, said Hebe Chen, market analyst at Vantage Markets, adding that credit cost normalisation and forward guidance will be central for upcoming bank results.

Investors are positioning cautiously ahead of the Reserve Bank of Australia’s rate decision on Tuesday, Chen added, with a hike widely priced in.

If the RBA signals inflation is entrenched and keeps further tightening firmly on the table, equities face another round of repricing, she said.

Local shares of a2 Milk slumped 9.8 per cent after the company announced a recall of three batches of an infant milk formula it sells in the US, after testing detected a toxin.

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That drop, along with a 3.8 per cent fall in Endeavour, which flagged higher fuel and freight costs, dragged the consumer staples index 2.6 per cent lower.

Energy stocks fell 2.1 per cent, as oil prices slipped after the US said it will help free ships stranded in the Strait of Hormuz.

Miners slid 0.3 per cent, with Rio Tinto down 0.7 per cent.

In other news, Australia and Japan beefed up cooperation around critical minerals amid a state visit by Japan’s prime minister, with the countries providing A$1.67 billion in support for the sector.

In New Zealand, the benchmark S&P/NZX 50 index rose 0.4 per cent to 13,097.68. REUTERS