The ASX200 closed down 0.20% today led by falls in the Financials sector, which were set against strength in the Materials space.
The story of the day was a call by Macquarie that clients should be “underweight everything” when it comes to ASX-listed banks.
A recent surge in bank shares — to 35-year highs — has been behind the ASX’s push to recent record highs. However, given the lofty valuations of the banks, it could all come crashing down suggests Macquarie.
It warned in a note to clients, “Bank share prices have continued to rally in recent months despite broadly consistent negative consensus views amongst investors and sell-side analysts.
“The natural question we ask ourselves is – what are we missing?”
NAB lost 2.76% today, Westpac fell 3.75%, ANZ was down 3.76% while CBA and Macquarie each lost more than 1%.
On a positive note, Materials was up 1.85% buoyed by iron ore miners Rio Tinto (ASX:RIO), BHP (ASX:BHP) and Fortescue (ASX:FMG). BHP gained 2.65% after being upgraded to a buy rating by analysts at Citi. It has further support from copper prices, which rose to an 11-month high overnight on fears of production cuts from Chinese smelters.
Arafura Rare Earths, which is backed by Gina Rinehart, closed up 76% after receiving a $840 million Federal package of loans and grants to help develop its mine and refinery in the Northern Territory.
Meanwhile, Appen lost 17% to 80¢ after New Jersey-based Innodata withdrew its $154 million bid for the company.
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