The market boards show the volatility at the Australian Securities Exchange (ASX) in Sydney.
THE Australian sharemarket has extended yesterday’s sell-off in early trade today as resources stocks dive in the wake of another oil price slide.
But banking stocks, the driver of the massive sell-off yesterday, steadied after Australia’s biggest lender revealed soothing figures in its half-yearly accounts.
At the open, the benchmark ASX 200 index was down 12.9 points, or 0.3 per cent, at 4819.2. The broader All Ordinaries index fell 13.1 points, or 0.27 per cent, to 4869.5.
By 11am, the losses had grown, with the ASX 200 down 1 per cent at 4786.3. It comes after the index tumbled 2.9 per cent yesterday in its worst trading session since September.
The Aussie market is now at its lowest level since mid 2013.
The Commonwealth Bank this morning posted another record first-half profit and held its dividend steady, soothing analyst concerns the generous payout may have to be trimmed.
The results are likely to cool investor fears about the health of the local banking sector — which accounts for about 40 per cent of the Aussie market by value — amid global jitters surrounding some of the world’s biggest banks and souring debts in emerging markets.
Short-term relief about the banking sector was likely to steady nerves, at least temporarily in early trading, CMC Markets chief analyst Ric Spooner said.
“None of the concerns markets have about banking stocks are yet apparent in CBA’s result,” he said.
“Given CBA’s dominant position in the Australian economy, this suggests underlying conditions in the broader economy although patchy, are reasonable in the aggregate.”
CBA shares surged 2.5 per cent to $74.66 while ANZ rose 0.8 per cent to $22.96.
National Australia Bank jumped 0.5 per cent to $25.02 while Westpac gained 0.5 per cent to $28.85.
But Bank of Queensland continued yesterday’s downward momentum, dropping 3.5 per cent to $11.25.
Wall Street spent much of the session in the red overnight, before recovering to trade sideways towards the close after global oil prices slumped again.
US Nymex crude dropped 5.9 per cent to $US27.94 a barrel, while global benchmark Brent crude plunged 7.8 per cent to $US30.32.
The slide saw big falls in resources stocks on the main index drop at the open of trade today.
Mining stocks slumped, with BHP Billiton tanking 4.6 per cent to $15.32 while Rio Tinto dropped 2 per cent to $41.16.
Oz Minerals jumped 1.4 per cent to $4.30 after it lifted its first-half profit 170 per cent and flagged an increase in production.
Energy shares were also downbeat, with Woodside slipping 1.4 per cent to $26.35 while Santos dipped 2.6 per cent to $2.98.
The supermarkets sunk, as Woolworths retreated 1.4 per cent to $22.78 while Wesfarmers gave up 1.3 per cent to $42.28.
Elsewhere, Telstra fell 1.3 per cent to $5.54 while Qantas edged up 1.1 per cent to $3.80.
But the financial sector remains the focus of global investors, after Deutsche Bank overnight sought to reassure employees about the bank’s finances, saying that while it would likely raise legal provisions this year, the lender “remains rock-solid.”
Deutsche shares have lost about 14 per cent over the past two days, and the lender’s stock has dived nearly 40 per cent this year to a 30-year low.
The Australian dollar recovered slightly after yesterday’s ASX rout, buying US70.6c late morning.
Elsewhere, iron ore remained unchanged at $US44.70 amid the Chinese New Year holiday period.
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