August 28, 2019 / 2:58 AM / 2 months ago

Australian shares inch up as miners counter losses in banks

* AMP at record low after S&P Global downgrade

* Miners and energy firms boost Aussie benchmark

* Fisher and Paykel Healthcare tops NZX on upgraded outlook

By Devika Syamnath

Aug 28 (Reuters) - Australian shares rose on Wednesday with investors picking up resource stocks and pulling out of financials, as a deepening U.S. debt yield curve inversion clouds the margin outlook for banks.

The S&P/ASX 200 index was 0.1%, or 6.8 points, higher at 6,478.0 by 0232 GMT. It had climbed 0.5% on Tuesday.

The banking sub-index, home to the benchmark’s weightiest stocks, traded as much as 0.6% lower. The “Big Four” banks lost between 0.4% and 1.2%.

“With the yields collapsing, we have to think the margins for the banks are getting tougher and tougher,” said Mathan Somasundaram, a Blue Ocean Equities market portfolio strategist.

The U.S. Treasury yield curve inversion deepened on Tuesday to levels not seen since 2007, which sent Wall Street stocks lower.

Such inversion could lead to negative net interest margins for banks as they pay short-term rates on deposits and take in long-term rates on loans.

Margin pressures for these banks threaten to eat away at their attractive dividends as well, Somasundaram added.

Shares of troubled Australian wealth manager AMP Ltd sunk as much as 3.3% to hit its lowest since listing, after Ratings agency S&P Global on Tuesday downgraded its credit worthiness by one notch.

“The money is rolling out of banks and going into resources, that’s favouring energy and the big miners,” Somasundaram said.

Mining titans BHP Group and Rio Tinto gained as much as 1.3% and 2%, respectively.

The energy sector also bumped up 0.7%, with the country’s biggest oil and gas firm Woodside Petroleum gaining as much as 1.4%.

Investors fled to the safety of gold stocks which ramped up on growing scepticism the United States and China would arrive at an amicable trade deal in the near term, even though conciliatory comments from U.S. President Donald Trump had offered some support in the previous session.

Gold miners Newcrest Mining and Evolution Mining notched up 3% and 4%, respectively.

In other news, infant formula maker Bellamy’s Australia reported a near 50% plunge in annual profit, hurt by regulatory changes in China and competition. Shares slumped as much as 14.5% in early trade before erasing some losses to trade 2.4% lower.

Australia’s No. 2 airline Virgin Australia Holdings hit a more than 10-year low following its plan to cut 750 jobs, merge business divisions and conduct a sweeping review of its operations after swinging to an annual underlying loss due to soft market conditions and higher fuel costs.

New Zealand’s benchmark index rose 0.9%, or 98.94 points, to 10,612.1.

Fisher and Paykel Healthcare Corp was the top gainer, up as much as 5.2% after upgrading its full-year earnings guidance. (Reporting by Devika Syamnath in Bengaluru Editing by Jacqueline Wong)

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