BHP, big banks weigh down Australian share market

Jacob Shteyman | February 21, 2023

The local share market was down ahead of lunchtime as traders digested the minutes from the Reserve Bank of Australia’s last meeting on monetary policy.

At noon on Tuesday the S&P/ASX200 had fallen 48.1 points, or 0.65 per cent, to 7,303.4, roughly unchanged from where it was before the RBA release at 11.30am AEDT.

The broader All Ordinaries was down 37.6 points, or 0.5 per cent, at 7,514.9.

The most consequential revelation to come from the February 7 minutes was that the central bank board had considered raising the cash interest rate by 50 basis points before settling on a 25bps increase to 3.35 per cent.

“The arguments for a 50 basis point increase stemmed from the concern that there had been a pattern of incoming prices and wages data exceeding expectations, and a risk that high inflation would be persistent,” the minutes said.

Market watchers continue to look for further rate hikes in the months ahead.

“Rabo maintains our view that the RBA will hike again in March, April and May to take the cash rate to 4.10 per cent with potential for further hikes later in the year to get interest rates above core inflation,” Rabobank senior strategist Benjamin Picton wrote on Twitter.

Every stock sector besides energy was down, with property the hardest hit after falling 1.1 per cent.

Property developer Stockland was down 4.5 per cent after wet weather construction delays and rising interest rates impacted profits.

Australia’s biggest company, BHP, dragged the mining sector into the red, down more than two per cent to $US47.32 ($A68.51) after its half-year profits slumped by a third.

Profit from operations in the half fell 27 per cent to $US10.8 billion (about $A15.6 billion) on lower prices for iron ore and copper, higher royalties paid on coal in Queensland and inflation.

The rest of the miners were higher, with Fortescue up 2.6 per cent to $57.50 while Rio Tinto climbed 0.9 per cent to $108.

Iron ore and lithium miner Mineral Resources jumped 2.9 per cent to $84.16 after raising its holding in gas and oil explorer Norwest Energy to over 61 per cent.

Shares in New Century Resources skyrocketed by more than 42 per cent after the copper miner received an unsolicited takeover offer from global mining giant Sibanye-Stillwater.

Financials were also a significant weight on the index, as all four of the big banks sunk.

Australia’s largest bank, CBA, was down 0.6 per cent to $101.60. Westpac fell 1.3 per cent to $22.72, ANZ slid 1.0 per cent to $24.50 and NAB was 0.9 per cent lower at 30.02.

There was better news for gambling giant Tabcorp, which was up 3 per cent to $1.03 after smashing half-year profit expectations by 30 per cent. 

The strong result was driven by a 58 per cent increase in cash wagering revenue as punters returned to retail venues following the end of the COVID-19 lockdowns.

Retailer Best & Less was up 7.2 per cent to $1.79 despite a 32 per cent drop in half-year net profit.

In the foreign exchange market, the Australian dollar was buying 69.08 US cents, from 68.92 US cents at Monday’s stock close.