Banks drag Australian shares lower; Trump tariff pledge weighs on market

Reuters

Banks drag Australian shares lower; Trump tariff pledge weighs on market

Nov 26, 2024 at 6:13 am GMT

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Banks decline more than 3%

CBA sheds over $6 bln in market value

Energy stocks down over 3%

RBNZ to cut interest rates by 50 bps - Reuters poll

Updates to close

By Nichiket Sunil

Nov 26 (Reuters) -Australian shares slipped on Tuesday from a record closing high scaled the previous day, as traders booked profits on top banks, while U.S. President-elect Donald Trump's pledge to implement new tariffs when he takes office also weighed on sentiment.

The S&P/ASX 200 index .AXJO ended 0.7% lower at 8,359.40, roughly 60 points shy of its record close marked on Monday.

Financials .AXFJ plunged around 2% in their worst day since late September. Top lender Commonwealth Bank of Australia CBA.AX lost 3.6% - or roughly A$9.5 billion ($6.16 billion) in market value - in its worst session since early August.

Investors chose to book profits in banks after their recent outperformance, and after the prudential regulator stood firm on its policy settings, primarily the serviceability buffer which assesses a borrower's capacity in the event of a sharp rise in interest rates.

"The big banks have fallen as the APRA's decision yesterday to maintain the mortgage serviceability buffer of 3% continues to weigh," said Tony Sycamore, a market analyst at IG, referring to the Australian Prudential Regulation Authority.

Australian banks have seen stellar inflows this year, with the index gaining about 35% this year, largely off the mining index's 16% declines.

"Investors appear to be taking profits in the financial sector, which has seen strong performance lately," said Junvum Kim, senior sales trader at Saxo Asia Pacific.

Meanwhile, Trump's pledge to impose new tariffs on imports from China has stoked inflation concerns and threatened commodity prices.

Australia's reliance on China's commodity imports makes the resources-rich country vulnerable to tariffs.

"Declining commodity prices could make trade-dependent economies more susceptible to the consequences of tariffs," Kim said.

Miners .AXMM slipped 0.6%, while energy stocks .AXEJ plunged 3%.

In New Zealand, the benchmark S&P/NZX 50 index .NZ50 shed 0.6% to end at 13,113.76.

The country's central bank is expected to deliver a half-point interest rate cut on Wednesday, according to a Reuters poll.

($1 = 1.5415 Australian dollars)

Reporting by Nichiket Sunil in Bengaluru; Editing by Subhranshu Sahu

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