ANZ’s weaker-than-expected $3.4 billion half year cash profit has weighed on the big four banks and pulled the share market slightly lower.
Phillip Capital senior client adviser Michael Heffernan said ANZ’s performance disappointed investors, and that affected the other major lenders.
“The market expects better, and investors are worried about interest margins although they were only down fractionally, but that’s what the market does,” he said.
The Australian dollar got a temporary boost from the Reserve Bank’s decision to hold the cash rate at 1.5 per cent, and signs its less concerned about the growth of household debt and low inflation.
The currency hit 75.55 US cents but later eased, trading at 75.27 US cents at 1700 AEST, still higher than 74.90 US cents on Monday.
ANZ shares dropped 2.1 per cent due to its lower than anticipated cash profit, flat revenue and a fall in margins because of stiff competition for deposits and loans, and increased funding costs.
The shares had gained 5.7 per cent in in the two weeks prior to the release of the results.
Westpac releases its half year results next week, and its shares dropped 0.9 per cent, while National Australia Bank reports on Thursday and was 0.2 per cent weaker.
Commonwealth Bank dropped 0.7 per cent.
Woolworths gained 1.2 per cent after it achieved 4.5 per cent growth in comparable food sales in the third quarter of the financial year, much stronger than Coles in the same period.
Wesfarmers, which owns Coles, dropped 0.7 per cent.
BHP Billiton fell 0.5 per cent, Rio Tinto added 0.2 per cent and Fortescue Metals gained 0.4 per cent.
Sydney Airport gained two cents, or 0.3 per cent, to $7.05, after it said it will not take up an option to develop the city’s proposed second airport, and the federal government took on the responsibility.
Milk processor Murray Goulburn’s listed entity, the MG Unit Trust, dropped 14.5 cents, or 14 per cent, to 89 cents as it announced it will axe up to 360 jobs, close three processing facilities, take a $410 million hit from writedowns and restructuring initiatives, and suspend dividend payments as it endeavours to shore up its milk supply.
ON THE ASX:
* The benchmark S&P/ASX200 dropped 6.1 points, or 0.1 per cent, to 5,950.4 points.
* The broader All Ordinaries index dropped five points, or 0.08 per cent, to 5,971.4 points.
* The June SPI200 futures contract was down two points, or 0.03 per cent, at 5,934 points.
* National turnover was 2.8 billion securities traded worth $6.7 billion.
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 75.25 US cents, from 74.90 US cents on Monday
* 84.41 Japanese yen, from 83.76 yen
* 68.93 euro cents, from 68.81 euro cents
* 58.46 British pence, from 58.01 pence
* 108.92 New Zealand cents, from 109.26 NZ cents
GOLD:
The spot price of gold in Sydney at 1700 AEST was $US1,256.00 per fine ounce, down $US6.00 from $US1,262.00 on Monday.
BOND SNAPSHOT AT 1630 AEST:
* CGS 5.25 per cent March 2019, 1.675pct, from 1.661pct
* CGS 4.25pct April 2026, 2.549pct, from 2.515pct
Sydney Futures Exchange prices:
* June 2017 10-year bond futures contract at 97.365 (implying a yield of 2.635pct), from 97.395 (2.605pct) on Monday
* June 2017 3-year bond futures contract at 98.13 (1.87pct), from 98.16 (1.84pct).
(*Currency closes taken at 1700 AEST previous local session, bond market closes taken at 1630 AEST previous local session)
