MELBOURNE, Australia--Earnings disappointment weighed heavily on Australia's big banks Tuesday and helped pull the stock market back from a two-year high.
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Still, the market ended well off its lows of the session after the central bank left its benchmark cash rate unchanged for a ninth straight month and made no substantive changes to its policy statement.
After climbing in each of the last seven sessions, the S&P/ASX 200 fell 6.1 points, or 0.1%, to settle at 5950.4. Financials, which had helped buoy the market of late, fell 0.8%.
Australia & New Zealand Banking was a big drag after its first-half earnings report punctured investor optimism that had lifted the bank's shares almost 6% in recent days. The other banks followed in its wake, ahead of their own earnings reports due in coming days.
"Given the outlook for low lending growth and a possible peak in the housing market, the recent rally in bank stocks appears to have been too much, too soon, given ANZ's result this morning," said Ric Spooner, chief market analyst at CMC Markets in Sydney.
ANZ reported a rise in its half-year profit, helped by a fall in charges for bad debts and a decline in costs, but analysts singled out weaker-than-expected revenue and a narrowing of its net interest margin as competition and higher funding costs continued to squeeze the lender.
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If the trend is repeated by the other big banks, then it suggested a risk to current market expectations, Macquarie said in a research report.
The banks offset a recovery in energy stocks and buying interest in industrials, healthcare and consumer shares. The broader market steadily recovered after the Reserve Bank of Australia's widely anticipated rate decision, which supported views the central bank will remain sidelined until 2018 at the earliest by record household debt and a weak job market.
For the day, 2.65 billion shares were traded with a value of 5.8 billion Australian dollar (US$ billion), Commonwealth Securities said.
ANZ sank 2.1%, Westpac Banking lost 0.9%, Commonwealth Bank of Australia was 0.7% weaker and National Australia Bank shed 0.2%.
Among energy stocks, Woodside Petroleum gained 0.2%, Santos climbed 3.2% and Origin Energy climbed 2.7%.
Grocery retailer Woolworths advanced 2.9% after it reported increases in food sales in Australia and New Zealand in its fiscal third quarter.
Sydney Airport shrugged off initial weakness to close up 0.3% after it said it had opted against developing and operating the federal government's proposed second airport in Sydney, citing considerable risks that would endure for decades without commensurate returns for its investors.
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(END) Dow Jones Newswires
May 02, 2017 03:01 ET (07:01 GMT)