Under-fire banks drag ASX lower
The Australian share market has closed lower, dragged down by banking and health care stocks while the Australian dollar has fallen after the Reserve Bank held the cash rate at 1.5 per cent for the 26th straight month.
The benchmark S&P/ASX200 index was down 46.1 points, or 0.75 per cent, to 6126.2 points on Tuesday, while the broader All Ordinaries index was 46.9 points, or 0.75 per cent, lower at 6245.8 points.
Pepperstone head of research Chris Weston said mistrust towards the banks brought on by allegations exposed in the royal commission continues to weigh on the financial sector, which is at its lowest since June.
"That reputational risk is causing the buyers to stand aside and people are selling," he said.
"That audit book dynamic is playing out (in the) market where points are coming out from the financial sector."
The sector was down 1.1 per cent with Commonwealth Bank leading the losses, down 1.2 per cent to $69.57 and NAB suffering the least, down 0.7 per cent to $27.40.
AMP shares were down 2.9 per cent to $3.03 following news corporate watchdog ASIC is preparing to launch the first royal commission-related legal action against the wealth manager over the fees-for-no-service scandal.
The local energy sector also lost ground but remained the only sector to finish in the black, closing 0.1 per cent higher after higher oil prices and easing trade fears.
Origin Energy was the best performer, up 1.3 per cent to $8.38, while Santos and Beach Energy were up 0.6 and 0.5 per cent respectively.
BHP was 0.3 per cent higher at $34.70 but the material sector closed lower, dragged down by Rio Tinto, which was down 0.7 per cent to $78.07.
Health care stocks weighed on the market also, with benchmark CSL down nearly two per cent to $199.33 at close.
Reserve Bank Governor Philip Lowe says Australia can expect inflation to rise, but unemployment to fall past its current six-year low of 5.3 per cent, as the central bank left the cash rate unchanged at 1.5 per cent.
Dr Lowe again called out weak household spending as a source of uncertainty for the economy a factor in the RBA board's decision to leave the official interest rate at its current record low.
The Australian dollar bounced slightly after the Reserve Bank's announcement, but then fell sharply.
The Aussie was buying 71.99 at 1630 AEST, down from 72.13 US cents on Monday.
ON THE ASX:
* The S&P/ASX200 was down 46.1 points, or 0.75 per cent, to 6126.2 points
* The All Ordinaries was 46.9 points, or 0.75 per cent, lower at 6245.8 points
* In futures trading the SPI200 futures index was down 43 points, or 0.70 per cent, at 6117.0 points at 1630 AEST.
CURRENCY SNAPSHOT AT 1630 AEST:
One Australian dollar buys:
* 71.99 US cents, from 72.13 US cents on Monday.
* 81.90 Japanese yen, from 82.19
* 62.40 euro cents, from 62.21
* 55.35 British pence, from 55.33
* 109.18 NZ cents, from 109.09
The spot price of gold in Sydney at 1630 AEST was $US1193.61 per fine ounce, from $US1188.00 on Monday.
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