Australian shares holding up against US bank scares

·4-min read

The local market has bounced back, holding up against the return of banking issues in the US.

The benchmark S&P/ASX200 index finished Friday up 26.9 points, or 0.37 per cent, to 7,220.

The broader All Ordinaries rose by 24.9 points, or 0.34 per cent, to 7,413.

Wall Street fell for the third consecutive day as turmoil in the regional banking sector weighed on sentiment.

CMC Markets analyst Tina Teng said the banking jitters might strengthen bets for the Federal Reserve to begin cutting rates as early as July.

The US Reserve Bank hinted on Thursday its hike of 25 basis points to 5.25 per cent could be its final increase.

The RBA released its Statement on Monetary Policy on Friday but analysts expect the detailed breakdown of updated forecasts is unlikely to influence the market given Governor Philip Lowe spoke to the snapshot earlier this week.

"Inflation has passed its peak in Australia but remains very high," the RBA said at the start of the report.

"Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable time frame."

Regardless, CommSec market analyst Steven Daghlian believes markets will continue to focus on inflation and interest rates.

"You've got US inflation (to be announced) mid-next week, which is going to be quite important each time we get inflation stuff anywhere around the world," he told AAP.

"Markets are looking to see if there are continued signs that inflation is falling or if it's stickier than expected."

The financials sector has turned around its performance from noon, with the major banks finishing in the green.

ANZ announced on Friday its half-year net interest income increased by 20 per cent to $8.5 billion from a year ago, driven by higher average net loans.

Its deposits and other borrowings increased by 8.0 per cent to $843b.

The banking group was up 1.45 per cent to $23.80, Westpac by 0.47 per cent to $21.35, and CBA gained 0.4 per cent to $96.13.

NAB and Macquarie continued moving lower despite reporting positive net profits this week, with NAB down 0.5 per cent to $26.58 and Macquarie down 0.2 per cent to $177.35.

"There were concerns for NAB in particular, easily the hardest hit of the banks because of its lower profits. Its smaller dividend and margins, which at least were all below expectations," Mr Daghlian said.

"In Macquarie's case, a record profit result of $5.2b for the year helped mainly by its commodities business - but again, maybe some questions in the market are being asked about how sustainable that might be."

Meanwhile, the materials sector finished up 0.52 per cent despite "disappointing" iron ore price economic data coming out of China putting major miners under pressure, Mr Daghlian added.

BHP was up 0.2 per cent to $44.05 and Newcrest Mining improving by 2.19 per cent to $29.80.

Rio Tinto was down 0.7 per cent to $109.37, and Fortescue Metals by 0.15 per cent to $20.25.

More than half of the ASX's 11 sectors finished in the green, with consumers discretionary, info technology and telecom services left in the red.

Blood products giant CSL was up by 0.32 per cent to $301.05 in health care while warehouse owner Goodman Group was up by 3.04 per cent to $20.00 in real estate.

The Australian dollar was buying 67.39 cents, from 66.73 US cents at Thursday's ASX close.

The latest US labour market report is set to be released Friday night, with expectations the Aussie dollar will become more volatile.


* The benchmark S&P/ASX200 index finished on Friday up 26.9 points, or 0.37 per cent, to 7,220.

* The broader All Ordinaries rose by 24.9 points, or 0.34 per cent, to 7,413.


One Australian dollar buys:

* 67.39 US cents, from 66.73 US cents at Thursday's ASX close

* 90.36 Japanese yen, from 89.76 Japanese yen

* 61.07 Euro cents, from 60.21 Euro cents

* 53.43 British pence, from 53.03 British pence

* 106.87 NZ cents, from 106.99 NZ cents