Australia shares fall awaiting bank capital changes, New Zealand down

By Hanna Paul

July 18 (Reuters) – Australian shares retreated on Tuesday
as investors waited to learn what changes are ahead in bank
capital rules while the central bank’s more upbeat economic
outlook, in minutes of its last meeting, failed to add cheer.

The S&P/ASX 200 index was down 75.37 points, or 1.31
percent, to 5,680.1 at 0305 GMT. The benchmark slipped 0.2
percent on Monday.

Aside from banking stocks, pressure on the index came from
Rio Tinto, which fell as much as 1.9 percent after it
trimmed its 2017 iron ore guidance 2017 due to bad weather and
work to modernise its rail lines.

The ‘Big Four’ banks, the quartet that account for more than
80 percent of the country’s lending, slid between 1.8 percent
to 2 percent. Three of them touched roughly three-week lows
while Westpac Banking Corp recorded its biggest
intraday slip in over a month.

The benchmark index of financial stocks fell as much
as 1.9 percent, to its lowest in nearly four weeks.

There is some caution ahead of release of updated bank
capital requirements, said Bill Keenan, general manager of
direct equities research at broker Lonsec, noting that the
regulator has said the rules will make banks “unquestionably
strong”.

“We are waiting to see how much more capital they would need
and what time period they would have to boost their profiles,”
Keenan added.

The minutes of the Reserve Bank of Australia (RBA) meeting
on July 4 showed optimism about the outlook, citing growth in
the labour market, public investment and household
consumption.

The Australian bourse also reflected the lacklustre
performance on Wall Street, which ended flat on earnings news.

Bucking the trend, gold stocks perked up with Newcrest
Mining up 1.3 percent as the yellow metal steadied with
a fall in dollar.

New Zealand’s benchmark index S&P/NZX 50 fell 7.73
points, or 0.1 percent, to 5,680.1 at 0305 GMT.

The benchmark was pulled down mainly by healthcare stocks
with Fisher and Paykel Healthcare Corporation, down 1.7
percent, leading decliners. Air New Zealand fell nearly
2 percent.
(Reporting by Hanna Paul; Additional Reporting by Urvashi
Goenka; Editing by Richard Borsuk)


Leave a Reply