australian stocks close a shade lower despite positive global cues 1695792015

The big banks are under pressure following APRA’s recommendation to boost capital levels by AU$30 billion

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By :  ,  Financial Analyst

A global rally following the accord between the Eurozone and embattled, near bankrupt Greece, bypassed Australian stocks given that the news broke after the ASX closed Monday. Nevertheless, a bearish trend on the ASX also did not discount the continuing recovery in Chinese stocks, with the Shanghai Composite index closing higher by 2.4 per cent, as more and more of the suspended shares on the Shanghai and Shenzhen exchanges limped back into trading.

In volatile trading, the S&P/ASX 200 surged higher after an initial sell-off in the opening hour, reaching its best levels shortly after 1 PM. However, selling pressure in the last hour of trade took a lot of those gains off the table, leaving the index into negative territory.

Indices and sectors

The benchmark S&P/ASX 200 fell 18.8 points, or 0.3 per cent, and closed at 5,473.2, while the broader All Ordinaries index was down 17.7 points, or 0.3 per cent, at 5,460.4.

The gaining sectors were healthcare (+1.37 per cent), telecommunications services (+0.29 per cent) and consumer staples (+0.01 per cent). The main losing sectors were energy (-1.30 per cent), materials (-0.83 per cent), information technology (-0.53 per cent) and financials (-0.50 per cent).


The big four banks all lost ground on news that they need to raise their top tier capital levels by at least 2 per cent, or an estimated AU$30 billion, to find a place in the rankings of the top 25 per cent of global banks, said the ABC, which quoted a report from the Australian Prudential Regulation Authority. Commonwealth Bank of Australia (ASX:CBA) was down 0.71 per cent to AU$85.18, Westpac Banking Corp (ASX:WBC) fell 0.42 per cent to AU$32.96, Australia and New Zealand Banking Group (ASX:ANZ) shed 1.09 per cent to AU$31.90 and National Australia Bank Ltd. (ASX:NAB) gave up 0.57 per cent to AU$32.88.

Energy stocks were under pressure as crude oil prices continued to rule soft. Woodside Petroleum Limited (ASX:WPL) lost 0.98 per cent to AU$33.24, Origin Energy Ltd (ASX:ORG) fell 1.32 per cent to AU$11.21, Oil Search Limited (ASX:OSH) was down 1.57 per cent to AU$6.89 and Santos Ltd (ASX:STO) fell 1.84 per cent to AU$7.48.

The big mining stocks all ended in the red, despite continuing strength in iron ore prices. BHP Billiton Limited (ASX:BHP) declined 0.90 per cent to AU$26.41, Rio Tinto Limited (ASX:RIO) fell 1.04 per cent to AU$51.53 and Fortescue Metals Group Limited (ASX:FMG) dumped 4.96 per cent to AU$1.73.

Except for Woolworths Limited (ASX:WOW), which gained 0.74 per cent at AU$27.12, other retailers all ended down. Wesfarmers Ltd (ASX:WES), the owner of supermarket chain Coles, closed lower by 0.53 per cent at AU$39.67, Caltex Australia Limited (ASX:CTX) slipped 0.40 per cent to AU$32.63 and Myer Holdings Ltd (ASX:MYR) lost 2.4 per cent to AU$1.22. According to The Australian, German retailer ALDI has revealed strong local earnings and profits, suggesting financial strength that can lead to a price war with retailers such as Woolworths.

Economic news, currency and market outlook

Greek Prime Minister Alexis Tsipras completely capitulated to Eurozone demands regarding tough reforms related to value-added tax, pensions, budget cuts, and an EU banking law that would impose sizeable losses on big bank depositors. In return, Tsipras secured a three-year bailout worth approximately €86 billion (AU$129 billion), but must get the deal approved by his country’s parliament by Wednesday, according to ABC.

Stocks closed sharply higher on Wall Street on news of a tentative bailout deal between Greece and the Eurozone, as well as the rise in Chinese stocks. The Dow Jones Industrial Average rose 217.27 points, or 1.22 percent, to end at 17,977.68. The S&P 500 gained 22.98 points, or 1.11 percent, to 2,099.6 and the Nasdaq Composite added 73.82 points, or 1.48 percent, to 5,071.51.

The Australian dollar is trading lower mainly due to strength in the US dollar following the accord between Greece and its creditors. At 07:00 this morning (AEST) the local currency was trading at 74.06 US cents, down from 74.54 US cents on Monday.

The Australian stock market is likely to open higher today given that at 06:45 am (AEST) this morning the September ASX SPI200 Index (AP) Futures was up 93 points at 5,498.

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