Australian shares bounced back on Wednesday as investors jumped back into the banking sector, reallocating capital in the ASX’s largest companies after a brutal sell-off in James Hardie.

The S&P/ASX 200 Index gained 21.8 points, or 0.3 per cent to 8918 as seven of the 11 sectors finished higher. Bank stocks helped the bourse rebound from a plunge in healthcare giant CSL in the previous session.

National Australia Bank was the standout, rallying 3.7 per cent to $42.03, followed by Westpac which rose 2.5 per cent to $38.23 and ANZ 2 per cent to $33.41. Commonwealth Bank lagged its rivals, but still finished 0.8 per cent higher to $172.40.

IG market analyst Tony Sycamore said the 17 per cent rout in CSL shares on Tuesday followed by the plunge in James Hardie on Wednesday had sparked a rotation into the financial sector.

“There has been strong flows,” he said. “The backbone of the banking sector is still strong and still providing cover. When things start to get a little bit rocky in the world, the banks are always there as a bit of a safe place.”

Materials were the weakest sector on the ASX, dragged lower by James Hardie, which crashed 27.8 per cent to $32 after its earnings guidance came in about 20 per cent weaker than analysts’ expectations. The company’s overall net income dived 60 per cent to $US62 million ($96 million) in the three months to June.

Iron ore players were also under pressure as futures for the steelmaking ingredient declined for a sixth session. Fortescue lost 1.6 per cent to $19.38 and Mineral Resources slid 5.2 per cent to $35.29.

CSL also extended Tuesday’s 17 per cent sell off following a disappointing earnings update from the healthcare giant. The shares fell a further 2.1 per cent to $220.74 after a series of broker downgrades.

Stocks on the move

Amid the barrage of earnings reports, The Lottery Corporation soared 7 per cent to $5.66 after it beat expectations despite a 12 per cent drop in net profit to $365.5 million.

HMC Capital rebounded from a heavy loss on Tuesday to soar 17.7 per cent to $3.85 as investors piled back into the beaten up stock and Morgans upgraded the David Di Pilla run company to a “buy” recommendation.

Stockland Group jumped 7 per cent to $6.12 on a slight beat, underpinned by strong fourth quarter residential sales and a lower-than-expected payout ratio.

Magellan Financial rose 1.6 per cent to $10.78 even as it reported a 31 per cent fall in full-year net profit to $165 million. The money manager said it would pay out the profits from its stakes in investment bank Barrenjoey and quantitative hedge fund Vinva through increased dividends to shareholders.

Transurban rallied 2.1 per cent to $14.30 as investors overlooked a 52 per cent drop in annual net profit to $178 million due to higher road operating and finance costs.

Gas pipeline owner APA Group has slightly beat consensus with a 6.4 per cent gain in underlying earnings to $2 billion. Shares rose 3.4 per cent to $8.76.

Cleanaway Waste Management lost 1.4 per cent to $2.81 despite posting a 14.6 per cent rise in underlying earnings to $411.8 million for the full year.

And Iluka Resources dived 7 per cent to $6.13 as weak prices for zircon and rutile drove a 31 per cent slump in half-year earnings to $92 million.

That’s a wrap on today’s news. Join us again soon for more live markets news.