MELBOURNE, Australia--Australian shares declined Tuesday after major banks gave up early gains and lower iron-ore prices weighed on mining stocks.
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Despite rising as much as 0.4% in the opening minutes of trade, the S&P/ASX 200 spent much of the session in the red. The benchmark index ended down 11 points, or 0.2%, at 5760.20, giving up a chunk of Monday's recovery. The index has fallen in four of the past five sessions.
The financial and materials subindexes each fell 0.5%, offsetting modest gains among energy stocks after oil prices rose to a fresh one-month high overnight on expectations the Organization of the Petroleum Exporting Countries will extend or even deepen output cuts at its meeting this week.
Westpac Banking, down 1%, led the major lenders lower. National Australia Bank dropped 0.8%, Commonwealth Bank of Australia was 0.4% lower and Australia & New Zealand Banking fell 0.3%.
After rallying about 25% following the U.S. presidential election, Australia's four biggest banks have dropped 12% on average since late April. The declines come amid concerns over stock valuation following a lackluster earnings season and fears the federal government's plans for a tax on liabilities will further dampen sentiment and add to pressures on profitability.
The regional banks were lower for a second straight day after S&P Global Ratings downgraded a number of financial institutions operating in Australia by a notch to reflect increased risk of a sharp correction in property prices and a significant rise in credit losses. The biggest banks escaped a downgrade because of S&P's expectation the government would offer timely financial support if needed.
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Bank of Queensland declined 2.4% and Bendigo & Adelaide Bank fell 1.6%.
Diversified mining companies BHP Billiton and Rio Tinto were down 1.2% and 0.7%, respectively, and Fortescue Metals Group was 2.1% weaker. The three firms are among the world's biggest suppliers of iron ore. Chinese iron-ore and steel futures paused Tuesday after a recent rebound.
Among energy stocks, Woodside Petroleum and Santos each added 0.6% and Oil Search rose 0.5%.
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(END) Dow Jones Newswires
May 23, 2017 03:35 ET (07:35 GMT)