The Australian sharemarket is on track for its sharpest one-day fall since early April, retreating from Friday’s record close as investors sell the major banks following strong gains last week.

At 2.05pm AEST, the S&P/ASX 200 was down 1.2 per cent to 8656.40. A close at this level would mark the benchmark’s first drop of more than 1 per cent since early April, when markets reacted to fallout from tariffs announced on US President Donald Trump’s Liberation Day.

Financials – off by 2.2 per cent – paced nine of the 11 index sectors lower in afternoon trade, reversing Friday’s strong gains. Westpac dropped 3.4 per cent, Commonwealth Bank by 2.9 per cent, ANZ 2.7 per cent and National Australia Bank declined 2.6 per cent.

AMP defied the sell-off, rising 8.6 per cent to a five-month high following a strong second-quarter update. Its superannuation arm posted its first positive net inflows since 2017, supported by platform growth and higher assets under management.

South32 also outperformed, gaining 4.3 per cent after reporting it had achieved 102 per cent of full-year production guidance, buoyed by solid output across key commodities in the June quarter.

Materials were slightly higher as Singapore iron ore futures have climbed to a four-month high as China’s plan for a mega dam in Tibet bolstered the outlook for demand.

The steel-making material futures for an active contract jumped 3.3 per cent to $US104.10 per tonne, following a run of four weekly gains. Higher prices pushed Forestcue Metals up by 1.5 per cent, Rio Tinto by 1.2 per cent and BHP was 0.1 per cent higher.

IG market analyst Tony Sycamore said Monday’s pullback is related to profit taking ahead of the August earnings season which will likely highlight stretched valuations with certain sectors, particularly the banks.

“The ASX200 is trading at a P/E ratio of 28.3 times, significantly higher than its 3-year average of 22.8 times,” he said.

Stocks in focus

In company news, Insignia Financial fell 6.5 per cent after telling investors it remains in talks with $3.4 billion bidder CC Capital, but stressed there was no certainty the discussions would lead to a formal offer.

Afterpay owner Block jumped 10.8 per cent after the announcement that it would be added to the S&P 500 Index on Wall Street from Wednesday following Chevron Corporation’s acquisition of Hess Corp.