Australian sharemarket dragged lower by banks but Macquarie bucks trend

The ASX was dragged lower by bank stocks but the group known as the ‘millionaire’s factory’ bucked the downward trend.

The Australian sharemarket pulled back despite another record high on Wall Street, with banks dragging the local bourse lower, although Macquarie Group bucked the trend.

The S&P/ASX200 dropped 0.86 per cent to 6821.2 while the All Ordinaries Index shed 0.82 per cent to 7102.1.

OpenMarkets Group chief executive Ivan Tchourilov said US investors confident about big tech’s ability to continue its skyward trajectory and deliver on earnings expectations sent the Nasdaq to another record high along with Bitcoin after Tesla announced a $1.9bn investment.

CommSec analyst Steve Daghlian said the US winning streak had run for six straight days “something that hasn’t actually happened since August”.

“We actually did get off to a decent start ... the market in Australia was as up as much as a third of one per cent but we certainly faded from those levels,” Mr Daghlian said.

“It could just be a case of the markets taking a little bit of a breather considering that just yesterday we hit a fresh 11-month high - we’re coming off the back of the best weekly advance in a couple of months as well.”

The Nasdaq index in the US hit a record high overnight. Picture: Kena Betancur/AFP

Annuities and retirement income solutions provider Challenger Ltd plunged 14.82 per cent to $6.15 after reporting its first half results, showing its full year guidance was unchanged.

Macquarie Research said the report appeared slightly weak, with Challenger’s Life business missing consensus by about 6 per cent, although that was broadly offset by strength in the Funds Management business.

Another financial services giant, Suncorp, reported a surge in first half group cash earnings but net profit fell 23.7 per cent. The company was upbeat about the performance, saying it was positive and came after a new operating model was implemented and the executive team “refreshed”.

Moody’s Investors Service vice president Frank Mirenzi said Suncorp’s result was underpinned by an improved economic outlook, with credit impairment charges significantly lower, and by the strong recovery in investment markets.

“Increasing insurance premium rates support revenue growth, and the group maintains very high levels of excess capital,” Mr Mirenzi said.

Suncorp shares added 2.78 per cent to $10.73.

Investment bank and financial services provider Macquarie Group jumped 6.62 per cent to $143.14 after providing its annual operational briefing saying trading conditions improved in the December quarter but its 2020-21 results were expected to be slightly down on the previous financial year.

The market must have been expecting worse from Macquarie, known as the ‘millionaire’s factory’ partly due to big executive pay packets. Picture: Joel Carrett/AAP

Goldman Sachs said it took that to mean net profit would be flat to 5 per cent lower, which was actually better than anticipated by analysts, seemingly largely driven by better than expected trading conditions within Macquarie’s Commodities and Global Markets division.

“The reaction from the market on today’s announcement suggests negativity was already priced into the stock, so even the slightest of good news has been well received,” Mr Tchourilov said.

ANZ eased 1.85 per cent to $24.93, National Australia Bank backtracked 1.69 per cent to $25.03 and Westpac shed 1.25 per cent to $22.17 while Commonwealth Bank erased 1.35 per cent to $87.42 ahead of the release of its half year financial results on Wednesday.

Despite a lift in iron ore prices, Rio Tinto dipped 0.54 per cent to $116.57 and BHP lost 0.54 per cent to $44.60.

Fortescue, however, added 0.72 per cent to $23.89 after Macquarie Research said it expected the miner to post a strong first half result and forecast a record interim dividend “bonanza” of $1.37, giving the company a 12-month share price target of $26.50.

Buy now pay later market leader Afterpay reached a record $159 before settling back to $152.10, up 0.89 per cent.

The Aussie dollar was buying 77.28 US cents, 56 British pence and 63.94 Euro cents in afternoon trade.

Originally published as Australian sharemarket dragged lower by banks but Macquarie bucks trend