Australia’s big banks have dragged the Australian share market lower on increasing chances of an interest rate cut.
The share market’s early gains evaporated in the afternoon after the price of Australian goods and services unexpectedly fell 0.2 per cent in the March quarter, the first decline since 2008 and widely missing market forecasts of a 0.25 per cent rise.
With inflation virtually non-existent, the Reserve Bank is increasingly likely to cut interest rates.
Morgans client adviser Alistair McCorquodale said the reasonably positive start to the day was overturned after the release of the inflation data.
“That data upset everyone and added to the volatility this afternoon,” Mr McCorquodale said.
“The miners have held up but the banks have come off as the currency came off.”
Among the big banks, ANZ fell 37 cents, or 1.5 per cent, to $23.88, while Westpac dropped 64 cents, or 2.1 per cent, to $30.94, Commonwealth Bank dropped $1.86, or 2.5 per cent, to $73.76 and National Australia Bank was 60 cents, or 2.2 per cent, lower at $26.90.
The big miners were also under pressure, with Fortescue Metals down nine cents at $3.06 after the iron ore miner announced it will repay another $US577 million of 2019 debt, resulting in further cost savings.
BHP lost 11 cents to $19.65 and Rio Tinto dropped $1.02 to $48.42.
Meanwhile, shares in medical device maker Resmed slid 29 cents or 3.7 per cent to $7.59 after its third-quarter income declined three per cent.
KEY FACTS:
* At 1615 AEST, the benchmark S&P/ASX 200 index was down 32.9 points, or 0.63 per cent, at 5,187.7 points.
* The broader All Ordinaries index was down 32.7 points, or 0.62 per cent, at 5,250.9.
* The June share price index futures contract was down 38 points at 5,157 points, with 37,863 contracts traded.
* National turnover was 2.79 billion securities traded, worth $6.2 billion.