Market wrap: ASX200 dips lower as financials sink

The Aussie sharemarket dipped lower on Wednesday as bank stocks tumbled.

The Aussie sharemarket dipped lower on Wednesday as bank stocks tumbled and investors turned to mining.

The benchmark ASX200 slipped 15.6 points, or 0.19 per cent, to close at 8126.4, while the broader All Ordinaries index fell 12.4 points, or 0.15 per cent, to settle at 8372.7.

Tech stocks retreated 1.47 per cent to 3366.7.

The sell-off was broadbased, with eight of 11 industry sectors ending in the red, led by financials with a steep 1.67 per cent decline.

Commonwealth Bank lost 2.3 per cent to $134.89 a share, ANZ fell 1.06 per cent to $30.78, NAB shed 2.65 per cent to $37.48 and Westpac retreated 0.82 per cent to $32.55.

“I think we’re seeing a bit of a rotation into resources,” eToro market analyst Josh Gilbert said.

“Materials are at the top and financials at the bottom and if you look at the gains we’ve seen from those big banks this year, they have really outperformed, really done very well, and I think there is a bit of profit-taking moving into the cheaper, underloved mining sector.”

The heavyweight materials sector surged 2.88 per cent as investors piled money into iron ore producers and coal businesses.

Whitehaven's Narrabri underground coal mine in NSW. Coal and iron ore stocks soared on Wednesday on the back of fresh stimulus from China. Picture: Whitehaven Coal

The miners are rallying after China’s central bank announced fresh stimulus measures on Tuesday designed to prop up the Middle Kingdom’s struggling property and steelmaking industries.

Singapore iron ore futures jumped 2 per cent to hit $96.60 a tonne on Wednesday following a 6.3 per cent surge on Tuesday.

BHP rallied 3.84 per cent to $42.70, Rio Tinto climbed 3.78 per cent to $120.85 and Fortescue surged 4.72 per cent to $18.85.

Coal stocks also leapt higher on the back of the federal government’s approval of three coal mines in NSW, including Whitehaven Coal’s Narrabri Stage 3 project.

Whitehaven jumped 3.55 per cent to $6.71, while Stanmore Resources leapt 5.28 per cent to $2.99 and Coronado surged 5.83 per cent to $1.09.

The market traded relatively flat in quiet day of trading before sinking in the late afternoon.

The ABS also reported inflation data on Wednesday, revealing annual headline inflation had dropped from 3.5 per cent to 2.7 per cent and underlying inflation had fallen from 3.08 per cent to 3.4 per cent.

Some analysts interpreted the reading to crack open the door for a December RBA rate cut.

The ASX200 edged lower on Wednesday. Picture: NewsWire / Gaye Gerard

“If annual trimmed mean inflation does not once again lurch higher but continues its recent trajectory lower, there is a growing chance it could reach the midpoint of the RBA’s 2-3 per cent target band by year-end, which would be significantly better than current RBA forecasts,” Betashares chief economist David Bassanese said.

“If so, there would be a good chance the RBA could cut interest rates before Christmas.”

Wall St lifted overnight on Tuesday, with the Dow Jones gaining 83 points, or 0.2 per cent, to 42,208 points, the S and P 500 index lifting 0.25 per cent to 5732 and the tech-heavy Nasdaq rising 0.56 per cent to 18,074.

In corporate news, Solomon Lew’s Premier Investments announced it was no longer working towards a demerger of its Smiggle and Peter Alexander stores while it fields a proposal from Myer for its Apparel Brands business.

Stock in Premier slumped 9.1 per cent per cent to $30.61, making it the worst performer on the benchmark.

The top gainer on the ASX200 was Champion Iron, leaping 13.45 per cent to $6.75.

The Aussie dollar lost 0.26 per cent to buy US68.7c at the closing bell.

Originally published as Market wrap: ASX200 dips lower as financials sink