Australia Stocks Pulled Down for Second Day by Banks

By Robb M. Stewart Features Dow Jones Newswires

MELBOURNE, Australia--Australian shares fell for a second day in a row Wednesday as banks again pulled back from recent gains after a lackluster earnings report from Australia & New Zealand Banking.

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A drop by materials stocks added to the day's selloff, more than offsetting a recovery by oil and gas companies after the price of crude rebounded in Asian trading.

The market closed at a two-year high Monday, as the big banks continued to rise in anticipation of first-half earnings reports from some of the country's biggest lenders. Sentiment shifted Tuesday with ANZ results, which showed a deterioration in its net interest margin as it was squeezed by higher funding costs and heightened competition.

Extending the retreat, the S&P/ASX 200 lost 58.1 points, or 5892.3, to 5892.3. The four largest banks collectively knocked almost 33 points from the index and mining company BHP Billiton close to 6 points.

For the session, 2.63 billion shares were traded with a value of 6.33 billion Australian dollars (US$4.77 billion), Commonwealth Securities said.

The conclusion of the Federal Reserve's policy meeting overnight isn't expected to result in another increase in short-term U.S. rates, although the statement will be scrutinized by investors for insight into future rate moves as well as any further comment on shrinking the central bank's balance sheet.

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After losing 2.1% on Tuesday, ANZ fell another 2.8% as analysts waded in on its half-year results and many trimmed earnings forecasts for the full year.

National Australia Bank, which is due to release its first-half numbers before the market opens Thursday, dropped 2.7%, Westpac Banking was 1.9% weaker and Commonwealth Bank of Australia was 1.7% lower.

Among mining stocks, BHP Billiton declined 2.3% and Rio Tinto and Fortescue Metals Group each fell 1% after iron-ore futures retreated sharply from a recent rebound. The three companies are among the world's biggest producers of the steelmaking ingredient.

Vocus Communications sank 27% after its second profit warning in five months.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

May 03, 2017 03:22 ET (07:22 GMT)