May 6, 2020 / 7:32 AM / 24 days ago

Australian shares snap two sessions of gains as financials drop

(Updates to close)

By Soumyajit Saha

May 6 (Reuters) - Australian shares ended lower in thin trade on Wednesday as investors took profits after two sessions of sharp gains, with banking stocks dominating the losses.

The S&P/ASX 200 index closed 0.42% lower at 5,384.6 points, having gained more than 3% in the past two sessions as the country eased coronavirus restrictions.

Dragging the benchmark on Wednesday, the financials sector fell 1.1% as the country’s “Big Four” banks lost between 0.8% and 2.4%.

Even though Australia’s big banks have warned of credit losses of more than A$17 billion ($10.96 billion) from the country’s first recession in three decades, analysts have estimated the bill could be even higher - perhaps more than double.

Earlier in the day, data showed that panic buying drove a record jump in Australian retail sales in March, although any economic windfall was curtailed as much of the surge came in prices rather than in the overall volume of goods.

“The numbers available to the market now seem out of date, while further data from April will show us the full extent of the virus’s damage”, said Henry Jennings, senior analyst at Marcus Today Financial.

Retail sales figures for April are expected to dive as coronavirus-induced restrictions and the closure of many businesses hammered spending.

“The companies have been warning us for a while about the economy’s condition, but official statistics are yet to catch up. Some investors also seem to be locking in profits before that,” Jennings said.

Topping the losses on the benchmark on Wednesday, National Storage REIT dropped 6.51% as it resumed trade following a discounted A$300 mln ($193.53 mln) share placement.

Miners also edged lower, with heavyweights Rio Tinto and BHP Group losing 0.9% each.

Energy stocks, however, managed to notch small gains as oil prices surged overnight.

Brent crude futures fell 0.61% to $30.78 a barrel on Wednesday, after rising nearly 14% overnight, while U.S. West Texas Intermediate (WTI) crude lost 0.9% to $24.34 per barrel.

Gold fell 0.12% to $1,704.50.

The number of issues on the ASX that advanced were 846 while 683 declined as a 1.2-to-1 ratio favored advancers.

New Zealand’s benchmark S&P/NZX 50 index rose 0.8% on the back of gains in healthcare stocks to finish the session at 10,572.84 points. ($1 = 1.5513 Australian dollars) (Reporting by Soumyajit Saha in Bengaluru; Editing by Aditya Soni)

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