Stocks close flat as banks weigh

The local sharemarket ended little changed as mining strength offset weakness in the banks.

The banking sector weighed on the market as investors mulled National Australia Bank’s results. (AAP Image/Mick Tsikas)

The local share market finished the session relatively flat after hitting a two-and-a-half year high in early trade, as mining strength offset weakness in the banks.

The benchmark S&P/ASX200 was down 6.067 points, or 0.1 per cent, at 5931.699 points. The broader All Ordinaries index was down 3.286 points, or 0.05 per cent, to 6002.199 points at the close.

CMC Markets chief market analyst Ric Spooner said the banking sector weighed on the market as investors mulled the implications of National Australia Bank’s newly announced initiatives on returns.

“The main pull factor is that the banks are down, probably in reaction to the NAB’s profit report,” he said.

“I think it just reflects the fact that it makes the dividend a little bit more vulnerable if there’s more of a downturn in revenue than expected next year while they increase their expenditure.”

NAB lost 2.83 per cent to $31.95 after it posted a $6.6bn profit for the year and flagged shedding 6000 jobs. Its peers also ended the session in the red. Commonwealth Bank edged down 0.33 per cent to $77.41, Westpac ticked 0.6 per cent lower to $33.00 and ANZ fell 0.83 per cent to $29.83.

The miners strengthened off the back of a rise in the price of iron ore futures.

Rio Tinto finished the session at 3.5-year closing high, gaining 3.33 per cent to $77.41, while BHP ticked up 1.48 per cent to $27.35.

Among the retailers, Harvey Norman and JB Hi-Fi lost ground following reports that Amazon has started buying inventory ahead of its Australia launch, which could possibly be prior to Christmas, Mr Spooner said.

“There are reports that Amazon has been focusing on electronics and supporting goods areas so that would put JB Hi-Fi and Harvey Norman possibly in the firing line for a bit of pre-Christmas price competition were that to happen,” he said.

Harvey Norman shed 5.01 per cent to $3.79 and JB Hi-Fi edged 1.11 per cent lower to $22.35.

Elsewhere, Telstra dropped 1.68 per cent to $3.51 after chief executive Andrew Penn warned that the next three years are going to see things get worse for the telco. TPG edged up 0.74 per cent to $5.48. Vocus rose 0.36 per cent to $2.80.

Seven West Media plunged 6.11 per cent to 61.5 cents after chief executive Tim Worner flagged job cuts over the 2018 financial year that would deliver $25m in savings. Mr Worner said he is confident the company can deliver a financial result in line with forecasts, despite soft market conditions.

Elsewhere, Fairfax crept up 0.46 per cent to $1.09 after shareholders voted in favour of the proposal to spin off its real estate asset Domain.

The Australian dollar was trading at US77.15c in late trade.