Second consecutive day of losses for the Australian stock market, dragged by banks and miners

The Australian stock market fell for the second day in a row, despite a positive lead from Wall St overnight, as a banking giant’s quarterly trading update triggered a sell-off of its shares.

The benchmark S & P / ASX200 Index closed 0.68 percent lower at 7369.9, while the All Ordinaries Index fell 0.56 percent at 7704.

CommSec said that nine of the 11 sectors finished in positive territory, but heavy losses by banks were the main weight that dragged the market lower.

OMG CEO Ivan Tchourilov said materials also took a sharp trot due to falling commodity prices, and gold miners carried a heavy weight.

“The biggest laggard in today’s 200 Index was also the biggest, the Commonwealth Bank,” Tchourilov said.

CBA shares fell to $ 98.99 after weeks of trading well above $ 100, and the bank reported a substantial drop in net interest margin.

Drivers included competition on home loan prices, the shift to lower-margin fixed-rate loans, and the continued impact of a low interest rate environment.

CBA shares rose nearly 40 percent for the year, before losing 8 percent on Wednesday, Tchourilov said.

“Both expenses and income were stable during the quarter, still up 20 percent compared to the first quarter of the last financial year,” he said.

“However, they have come well below their average, and investors have chosen to walk.

Camera iconCommonwealth Bank earnings were weaker than in recent quarters and investors were concerned about lower margins. Emma Brasier / NCA NewsWire Credit: News Corp Australia

“Banks have been under significant pressure since the royal financial services commission and are still downsizing their operations to adopt a more streamlined model.

“The question remains whether they will be able to replicate the huge gains of recent years.”

ANZ lost 2.04 percent to $ 27.84, National Australia Bank fell 1.1 percent to $ 28.91 and Westpac lost 1.67 percent to $ 22.37.

Rio Tinto was down 0.98 percent to $ 88.91, BHP lost 1.45 percent to $ 35.96 and Fortescue was up 1.89 percent to $ 15.59.

Among gold miners, Evolution fell 2.9 percent to $ 4.01, Newcrest was down 2.1 percent to $ 24.66 and Northern Star was down 1.34 percent to $ 10.33.

CommSec said Nufarm was the worst performer, despite posting a strong set of full-year earnings figures, with revenue up 10 percent and EBITDA up 51 percent compared to the corresponding prior period.

It also declared a 4-cent dividend, the first payment to shareholders since October 2018, but it closed 8.57 percent lower at $ 4.59.

Mosaic Brands, the fashion retailer behind chains like Rockmans, Rivers and Noni B, was up 6.4 percent to 66.5 cents after holding its annual general meeting.

Mosaic brands
Camera iconInvestors at Mosaic Brands were delighted with the AGM’s comments, including international expansion plans. Steven Saphore / NCA NewsWire Credit: News Corp Australia

Investors heard that 200,000 in-store customers were also buying online throughout the year, and about 200,000 new customers were acquired online only.

Mosaic is expanding its online offering and moving into new foreign markets.

“In the second half of this year we will launch four of our brands to the US market and, while it will be a slow process, it will sow the seed in the years to come,” said CEO Scott Evans.

Afterpay also held its General Shareholders’ Meeting and focused on presenting the value of its planned merger with US payments giant Square to shareholders, who will vote on the proposal on December 6.

Shares of the buy-now-pay-later favorite market rose 2.09 percent to $ 119.84.

CommSec noted that both Seven West Media and Seek lost ground despite updating the guide for the entire year.

The media group weakened 3 percent to 64.5 cents, while the online jobs site fell 1.29 percent to $ 35.28.

In economic news, the wage price index rose 0.6 percent in the September quarter, “which should attract more workers to the market and strengthen the economy,” Tchourilov said.

“The only downside will be additional staffing costs that will reduce profitability, as noted today in the Commonwealth Bank quarterly update.”

The Australian dollar was buying 72.92 US cents, 54.28 British pence and 64.5 euro cents in afternoon trading.

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