The share market has posted its biggest fall in almost two months as the battle between the Turnbull government and the big banks over a proposed $6.2 billion bank levy weighs on investor sentiment towards the financial sector.
“It looks like the banks are the key ones getting hit today,” Phillip Capital senior client adviser Michael Heffernan said.
“I don’t think the market likes fights going on – this argumentative stuff, with the banks saying they’re going to pass on the levy to customers, and the government not liking that.”
Executives of the major banks now say they have been forced into signing confidentiality agreements before seeing the draft legislation for the levy.
Mr Heffernan said the latest wages data, which showed subdued growth of 0.5 per cent for the March quarter, plus an index showing consumer confidence had weakened slightly in May, also contributed to market negativity.
The bright light on the market was the big miners, which benefited from a lift in the iron ore price, he said.
The benchmark S&P/ASX200 dropped 1.1 per cent, its biggest fall since March 22.
Among the banks, Westpac fell 2.3 per cent, National Australia Bank shed 2.1 per cent, Commonwealth Bank dropped two per cent, ANZ was 1.3 per cent weaker, and Macquarie Group also lost 1.3 per cent.
Fortescue Metals surged 4.15 per cent, Rio Tinto added 2.2 per cent and BHP Billiton gained 0.2 per cent.
Luxury handbag retailer Oroton plunged 19.6 per cent to $1.085 after warning that its full year earnings will fall by up to 85 per cent.
Wesfarmers, the owner of Coles, Bunnings, Kmart and Target, eased 1.3 per cent to $43.36 after ruling out spinning off its Officeworks business.
DuluxGroup slipped 0.9 per cent to $6.78 despite lifting its net profit by 14 per cent in the six months to March 31.
The Australian dollar had eased slightly against the US dollar to 74.22 US cents at 1700 AEDT, after the US dollar dropped against major currencies due to concerns about US President Donald Trump sharing information with Russia.
Traders say the Aussie is still under pressure because of concerns about a softer Chinese economy.
ON THE ASX:
* The benchmark S&P/ASX200 was down 64.5 points, or 1.1 per cent, at 5,786 points at 1630 AEST.
* The broader All Ordinaries index was down 61 points, or 1.04 per cent, to 5,821.2 points.
* The June SPI200 futures contract was down 73 points, or 1.25 per cent, to 5,781 points.
* National turnover was 2.3 billion securities traded worth $6.05 billion.
CURRENCY UPDATE AT 1700 AEST:
* 74.22 US cents, from 74.24 US cents on Tuesday
* 83.405 Japanese yen, from 84.09 yen
* 66.84 euro cents, from 67.41 euro cents
* 57.49 British pence, from 57.44 pence
* 107.42 New Zealand cents, from 107.64 NZ cents
GOLD:
The spot price of gold in Sydney at 1700 AEST was $US1,243.30 per fine ounce, up $US8.09 from $US1,235.21 on Tuesday
BOND SNAPSHOT AT 1630 AEST:
* CGS 4.50 per cent April 2020, 1.7432pct, from 1.773pct on Tuesday.
* CGS 4.75 per cent April 2027, 2.5294pct, from 2.582pct.
Sydney Futures Exchange prices:
* June 2017 3-year bond futures contract at 98.21 (implying a yield of 1.79pct), from 98.18 (1.82pct) on Tuesday
* June 2017 10-year bond futures contract at 97.435 (2.565pct), from 97.385 (2.615pct).
(*Currency closes taken at 1700 AEDT previous local session, bond market closes taken at 1630 AEDT previous local session)
