The Australian share market has ended the week on a downbeat note with the big banks leading the losses.
After a modestly positive opening, the benchmark S&P/ASX200 finished the day 0.58 per cent lower at 6,062.9 points – still above the 6,000 mark secured on Tuesday – while the broader All Ordinaries index retreated 0.51 per cent to 6,155.4 points.
Bell Direct equities strategist Julia Lee said the big four banks were down around one per cent and were the main drag on the market.
“Part of that story is that we did see banks overseas being hit and US bond yields are falling,” she said.
“US bond yields rising tends to be good news for financials because it means that they have the opportunity to reprice their mortgage books and their lending books upwards and to regain margins but the opposite is true for falling bond yields.”
The US Federal Reserve this week decided to keep interest rates unchanged, acknowledging inflation is close to target, setting investors for a June rate rise but lowering expectations of a faster pace of rate hikes.
Despite Friday’s softer result, the Australian market has posted five consecutive weeks of gains despite weakness in equities overseas.
Ms Bell said it was good to see the market start the month on a positive note, considering May, traditionally a “confession season” thanks to companies releasing revised earnings forecasts, was usually the weakest month of the year.
Investors bought up Macquarie Group shares on Friday after it lifted full-year profit 15 per cent to a record $2.56 billion, adding it expects to report a similar profit next year.
Shares in the financial services giant closed 0.2 per cent higher at $108.01 after briefly trading around $110 for the first time.
Of the big four banks, Commonwealth Bank fared worst, down by 1.6 per cent to $72.76, followed by National Australia Bank, down one per cent to $29.10, while Westpac fell 0.9 per cent to $29.10 and ANZ was 0.6 per cent weaker at $27.55.
The mining sector also finished in the red, with resources giant BHP Billiton losing 0.1 per cent to $31.49 and South32 shedding 3.1 per cent to $3.76.
But gold producer Newcrest jumped 0.6 per cent to $21.55 after gold prices surged following the US central bank’s reassurance to the market interest rate rises would be gradual.
Energy stocks also fell as oil prices came under pressure on Asian markets.
Woodside Petroleum closed down 1.1 per cent to $32.30, Santos lost 0.3 per cent to $6.20 and Origin Energy was 0.7 per cent weaker at $9.72.
The healthcare sector was also softer, with vaccines and blood products giant CSL falling 0.2 per cent to $170.21 and hearing implant developer Cochlear reversing 1.2 per cent to $195.60.
In company news, Ainsworth’s shares plummeted 37.7 per cent to $1.21 after cutting earnings guidance, with the gaming machine company now expecting its full-year profit to be about $36 million compared with $57.4 million the previous year.
Liver cancer treatment developer Sirtex Medical jumped 5.6 per cent to $29.42 after receiving a surprise $1.9 billion takeover bid from a China-based asset manager.
The Australian dollar was stronger as the greenback retreated on lessened US rate expectations, with the Aussie trading at 75.34 US cents at 1630 AEST, from 75.17 US cents on Thursday.
ON THE ASX:
* The benchmark S&P/ASX200 closed down 35.4 points, or 0.58 per cent at 6,062.9 points
* The broader All Ordinaries index was down 31.6 points, or 0.51 per cent, at 6,155.4 points
* The SPI200 futures contract was down 30 points, or per cent, at 6,048 points.
* National turnover was 3.4 billion securities traded worth $5.7 billion
CURRENCY SNAPSHOT AT 1700 AEST:
One Australian dollar buys:
* 75.25 US cents, from 75.17 on Thursday
* 82.12 Japanese yen, from 82.44 yen
* 62.79 euro cents, from 62.73 euro cents
* 55.46 British pence, from 55.29 pence
* 106.88 NZ cents, from 107.11 cents
The spot price of gold in Sydney at 1700 AEST was $US1,310.02 per fine ounce, from $US1,308.10 per fine ounce on Thursday.
BOND SNAPSHOT AT 1630 AEST:
* CGS 5.75 per cent May 2021, 2.1643pct, from 2.1919pct on Thursday
* CGS 2.25pct May 2028, 2.758pct, from 2.8096pct
Sydney Futures Exchange prices:
* June 2018 10-year bond futures contract was 97.215 (implying a yield of 2.785pct), from 97.175 (2.825pct) on Thursday
* June 2018 3-year bond futures contract was 97.785 (2.215pct), from 97.765 (2.235pct)
(*Bond market closes taken at 1630 AEST previous local session; currency closes taken from 1700 AEST previous local session)