Australia Market eases on profit booking, financials drag

The Australian share market was tad lower on Tuesday, 17 December 2019, as losses from the major banks amid regulatory troubles and steep tumble in gold stocks. Market losses were capped after Australia's central bank's dovish stance and surprisingly strong economic reports out of China. Around late afternoon, the benchmark S&P/ASX200 index decreased by 1.71 points, or 0.03%, to 6,848.00, while the broader All Ordinaries shed 1.21 points, or 0.02%, to 6,951.10.

Growth in factory activity and retail sales in the world's second-largest economy both beat market expectations for last month. China's industrial production, which measures China's industrial output, including manufacturing, mining and utilities, grew by 6.2% in November, up from October's 4.7%. Meanwhile, retail sales grew by 8.0% in November, up from 7.2% a month ago.

Minutes from the Reserve Bank of Australia's (RBA) December meeting, where the central bank opted to leave the cash rate unchanged at 0.75%, showed it was prepared to ease monetary policy further if needed. Members agreed that it would be important to reassess the economic outlook in February 2020, when the Bank would prepare updated forecasts, the meeting minutes read. As part of their deliberations, members noted that the Board had the ability to provide further stimulus to the economy, if required.

Shares of banks and gold miners were under pressure as APRA ordering the bank to set aside an additional $500 million in capital while formally launching its investigation into possible breaches of the Banking Act. Westpac (WBC) was down by 1.2 per cent. ANZ fell 0.4 per cent as it holds its Annual General Meeting with investors today.

Smartgroup (SIQ) was down 5 per cent on a broker downgrade. The salary packaging company slumped by 15 per cent yesterday after flagging lower profits. Its insurance underwriter changed terms on products it sells, which it expects will reduce its earnings by around $4 million. Salary packaging allows employees to increase disposable income by paying for certain expenses from their pre-tax income.

Northern Star (NST) has announced the purchase of a 50 per cent stake of the Kalgoorlie Consolidated Gold Mines joint venture in WA for US$800 million from Newmont Mining. NST remains in a trading halt for a second day.

CURRENCY NEWS: The Australian dollar, sensitive to shifts in broader risk appetite, inclined against greenback. The Australian dollar changed hands at $0.6922 after rising from levels below $0.688 in the previous session.

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