The Australian share market has closed around 0.5 per cent lower, led downwards by the big banks, as investors fear that the federal government will introduce a new tax on banks in tonight’s federal budget.
“The glaring red on my screen is the big four banks,” CMC Markets chief market strategist Michael McCarthy said.
“Clearly these reports today that there will be a new tax imposed in inter-bank lending is hitting that sector very hard.”
Mr McCarthy said overall trading volumes had been quite light, reflecting tonight’s “major event” (the federal budget) which could change the landscape.
Among the major banks, ANZ was down 2.64 per cent at $29.16, National Australia Bank dropped 2.05 per cent to $32.42, and Westpac lost 3.52 per cent to $32.88.
Commonwealth Bank was off 3.85 per cent at $82.02 after an underwhelming trading update.
Commonwealth Bank’s third-quarter cash earnings lifted four per cent to about $2.4 billion as increased lending and deposits offset pressure on margins.
Mr McCarthy said disappointing retail sales figures released on Tuesday had hurt some retail stocks.
JB Hi-Fi was 4.39 per cent lower at $23.98, and Harvey Norman eased 3.5 per cent to $4.13.
The Australian Bureau of Statistics said on Tuesday that seasonally adjusted retail spending fell 0.1 per cent to $25.63 billion in March.
Economists had expected a 0.3 per cent rise.
Among other stocks, casinos operator Crown Resorts gained 1.68 per cent to $12.71 after news it had agreed to sell its remaining stake in its Macao joint venture to partner Melco for $1.34 billion.
Incitec Pivot rose 2.98 per cent to $3.80 after the explosives, chemicals and fertiliser supplier’s first-half profit more than quadrupled to $152.1 million.
Meanwhile, the Australian dollar is trading lower against its US counterpart, and was at 73.39 US cents at 1700 AEST down from 74.04 US cents on Monday.
Mr McCarthy said the Australian dollar was generally weaker against the greenback before the release of the retail sales figures, reflecting the strength of the US dollar.
Mr McCarthy said the weaker-than-expected retail sales data added fuel to the idea that the next move in interest rates should be down, not up.
ON THE ASX AT 1630 HRS:
* The benchmark S&P/ASX200 was down 31 points, or 0. 53 per cent, at 5,839.9 points
* The broader All Ordinaries index was down 23.3 points, or 0.4 per cent, to 5, 874.5 points.
* The June SPI200 futures contract was down 36 points, or 0.61 per cent, at 5,826 points.
* National turnover was 2.41 billion securities traded worth $7.66 billion.
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 73.39 US cents, from 74.04 on Monday
* 83.284 Japanese yen, from 83.47 yen
* 67.29 euro cents, from 67.41 cents
* 56.75 British pence, from 57.03 pence
* 106.6 New Zealand cents, from 106.86 NZ cents
GOLD:
The spot price of gold in Sydney at 1700 AEST was $US1,227.80 per fine ounce, down $US1.80 from $US1,229.60 on Monday
BOND SNAPSHOT AT 1630 AEST:
* CGS 5.25 per cent March 2019, 1.7251pct, from 1.7266pct
* CGS 4.25pct April 2026, 2.6243pct, from 2.6138pct
Sydney Futures Exchange prices:
* June 2017 10-year bond futures contract at 97.285 (implying a yield of 2.715pct), from 97.295 (2.705pct) on Monday
* June 2017 3-year bond futures contract at 98.080 (1.920pct), from 98.070 (1.930pct) on Monday.
(*Currency closes taken at 1700 AEDT previous local session, bond market closes taken at 1630 AEDT previous local session)
