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Australia: Shares inch up as miners counter losses in banks
[BENGALURU] Australian shares rose on Wednesday with investors picking up resource stocks and pulling out of financials, as a deepening US debt yield curve inversion clouds the margin outlook for banks.
The S&P/ASX 200 index was 0.1 per cent, or 6.8 points, higher at 6,478.0 by 0232 GMT. It had climbed 0.5 per cent on Tuesday.
The banking sub-index, home to the benchmark's weightiest stocks, traded as much as 0.6 per cent lower. The "Big Four" banks lost between 0.4 per cent and 1.2 per cent.
"With the yields collapsing, we have to think the margins for the banks are getting tougher and tougher," said Mathan Somasundaram, a Blue Ocean Equities market portfolio strategist.
The US Treasury yield curve inversion deepened on Tuesday to levels not seen since 2007, which sent Wall Street stcks lower.
Such inversion could lead to negative net interest margins for banks as they pay short-term rates on deposits and take in long-term rates on loans.
Margin pressures for these banks threaten to eat away at their attractive dividends as well, Somasundaram added.
Shares of troubled Australian wealth manager AMP sunk as much as 3.3 per cent to hit its lowest since listing, after Ratings agency S&P Global on Tuesday downgraded its credit worthiness by one notch.
"The money is rolling out of banks and going into resources, that's favouring energy and the big miners," Mr Somasundaram said.
Mining titans BHP Group and Rio Tinto gained as much as 1.3 per cent and 2 per cent, respectively.
The energy sector also bumped up 0.7 per cent, with the country's biggest oil and gas firm Woodside Petroleum gaining as much as 1.4 per cent.
Investors fled to the safety of gold stocks which ramped up on growing scepticism the United States and China would arrive at an amicable trade deal in the near term, even though conciliatory comments from US President Donald Trump had offered some support in the previous session.
Gold miners Newcrest Mining and Evolution Mining notched up 3 per cent and 4 per cent, respectively.
In other news, infant formula maker Bellamy's Australia reported a near 50 per cent plunge in annual profit, hurt by regulatory changes in China and competition. Shares slumped as much as 14.5 per cent in early trade before erasing some losses to trade 2.4 per cent lower.
Australia's No. 2 airline Virgin Australia Holdings hit a more than 10-year low following its plan to cut 750 jobs, merge business divisions and conduct a sweeping review of its operations after swinging to an annual underlying loss due to soft market conditions and higher fuel costs.
New Zealand's benchmark index rose 0.9 per cent, or 98.94 points, to 10,612.1.
Fisher and Paykel Healthcare Corp was the top gainer, up as much as 5.2 per cent after upgrading its full-year earnings guidance.