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Australia shares trapped, NZ stocks edge lower

Published 16/08/2016, 01:20 pm
© Reuters.  Australia shares trapped, NZ stocks edge lower
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By Cecile Lefort and Rebecca Howard

SYDNEY/WELLINGTON, Aug 16 (Reuters) - Australian shares moved sideways on Tuesday as gains in the energy and natural resources sectors were offset by weakness in financials and discretionary stocks in another busy week of earnings reporting.

The S&P/ASX 200 index .AXJO edged off 4.1 points or 0.1 percent to 5,536.2 by 02:54 GMT, but remained close to a peak of 5,611.2 touched earlier this month. It has gained 4.5 percent so far this year, largely due to falling interest rates at home and low returns on bank deposits.

"With bond yields continuing at record lows, the comparatively higher yields on offer in equities are likely to continue to see support for the index," said Angus Nicholson, a market analyst at IG.

He said the biggest domestic risk could be the possibility that further RBA rate cuts could see sentiment begin to turn on the banks.

Share in Australian banks, which account for around a third of the benchmark's weighting, have already dropped between 5 percent and 11 percent this year. IG's Nicholson said lower interest rates would further erode the banks' net interest margins and possibly affect their dividends.

Markets are pricing in a 50-50 chance of another easing this year by the Reserve Bank of Australia following its August cut to a record low 1.5 percent.

Among the largest financial institutions, National Australia Bank NAB.AX led losses with a drop of 1 percent, followed by ANZ Bank ANZ.AX , off 0.5 percent. Commonwealth Bank of Australia CBA.AX edged down 0.1 percent, while Westpac Banking Corp WBC.AX gained 0.25 percent.

G8 Education GEM.AX was the red lantern, down 16 percent after it reported a fall in profits. resources stocks rose, underpinned by firmer commodity and oil prices.

BHP Billiton (LON:BLT) BHP.AX gained 0.5 percent, while spin-off South32 S32.AX bounced 1.2 percent. BHP rival Rio Tinto (LON:RIO) RIO.AX edged up 0.2 while iron ore producer Fortescue Metals Group FMG.AX added 2.2 percent.

Whitehaven Coal WHC.AX , WorleyParsons WOR.AX and Santos STO.AX jumped between 2.5 percent and 3.8 percent.

For more individual stocks activity click on STXBZ

New Zealand's benchmark S&P/NZX 50 index .NZ50 fell 0.1 percent or 9.57 points to 7,378.78 as investors digested company earnings reports.

Heartland Bank HBL.NZ was up 0.7 percent after reporting a rise in its full year net profit. Summerset SUM.NZ also continued to ride a wave of solid earnings, up 1.4 percent.

In the other direction, Fletcher Building FBU.NZ was down 1.6 percent. The building company is due to report on Wednesday.

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