Australia shares rebound as bank stocks surge, New Zealand up too

(Updates to close)

July 19 (Reuters) – Australian shares advanced on Wednesday,
unfazed by a slip in BHP Billiton, as the “Big Four” banks
surged after declaring comfort with new capital rules designed
to make them “unquestionably strong”.

The S&P/ASX 200 index ended up 44.71 points, or 0.8
percent to 5,732.1. On Tuesday, the benchmark dropped 1.1
percent.

The financial sector accounted for nearly three-quarters of
the gains on the bourse. The sub-index of financial stocks
ended 2.6 percent higher.

Shares of the Big Four banks, which represent over 80
percent of the country’s lending, leapt between 3.0 and 3.9
percent after the Australian Prudential Regulation Authority
(APRA) said banks were required to raise common equity Tier 1
ratio, a key gauge of a lender’s strength, to at least 10.5
percent by January 2020.

The banks said they were well placed to meet the capital
requirements.

The benchmark’s biggest laggard was mining giant BHP
Billiton. It tumbled 2.6 percent, its biggest one-day
fall in four weeks, after reporting output cuts in coal and
petroleum for the year.

Rio Tinto also dragged material stocks lower, on
extended losses from the previous session after reporting
disappointing results.

New Zealand’s benchmark S&P/NZX 50 index rose 25.42
points, or 0.3 percent, to 5,736.1 at 0606 GMT.

Financial and telecom stocks were the biggest boosts while
consumer staples were among the two main drags on the index.
Westpac Banking Corp and Australia and New Zealand
Banking Group led gainers in the benchmark.
(Reporting by Hanna Paul; Editing by Richard Borsuk)

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