Another gloomy day for the big banks drove a $23 billion sell-off yesterday that pulled the Australian sharemarket to its lowest close in nearly four weeks.
That was after a multi billion dollar slide last week, dominated by a $20 billion loss for the major banks.
ANZ drove much of the pain yesterday and last week. It fell more than 5% on Thursday after it revealed it expected bad debts to blow out by at least $100 million more than the $800 million it flagged in February. – pushing the total towards $1 billion for the half year and almost double the $510 million in the first half of 2014-15.
Westpac also revealed a rise in soured personal loans in parts of the country that have a big resources sector presence, particularly Western Australia and Queensland – not much, bit enough to set off alarm bells.
Those concerns escalated over the long break and exploded on the ASX yesterday.
The ASX lost 1.6% per cent to 5004.5, after briefly dipping below the 5000 level, while the broader All Ordinaries shed 1.5% to 5076.2.
The slide in the big banks, which was sparked by ANZ’s warning of a $100 million blow-out in bad debt costs last Thursday, showed not signs of abating.
ANZ fell another 3.4% to $23.20, taking the losses on Thursday and yesterday to $6 billion. Westpac lost 3% to $29.93, and the Nab and CBA big two dropped around 2.4% each ($25.62 and $73.12 respectively), while Macquarie slid 2.6% to just over $64 because of its huge holdings of junk bonds in the US.
The losses in the banks infected the wider market, ensuring that all sectors ended in the red. Health was another big loser, with CSL plunging 3.55% to $98.57, closing below $100 for the first time this year. That was after it went against the trend last Thursday and rose 1.6%.
After a cautious, and positive start, the big miners hit the wall during the day and fell.
BHP lost 1.7%, Rio fell 0.4% and South32 slid 5.2% (it rose 2% on Thursday).
Bellamy’s was one of the biggest losers of the day,dropping 6.5% on stories that China is about to introduce an11.9% tax on overseas online purchases.
