Stocks’ worst day in a month

The local market’s mood has turned down sharply, with the banks sold off heavily.

The Australian sharemarket has endured its worst day in more than a month as the big banks were sold off with gusto in the wake of the Reserve Bank’s rate cut.

At the closing bell, the benchmark S&P/ASX 200 index slumped 74.8 points, or 1.35 per cent, to 5,465.7, while the broader All Ordinaries index softened 70.7 points, or 1.26 per cent, to 5,551.4.

The falls were the heaviest since June 24 and followed a 0.8 per cent retreat on Tuesday, with the lack of buying pressure seen as a sign easy policy from central banks is losing its power.

“Pessimism is now stalking investors, particularly in light of recent gains and market indices at annual or all-time highs,” CMC Markets chief market strategist Michael McCarthy said.

Altair Asset Management market analyst Tristan K’Nell warned against reading too much into the action given low volumes, however, with weak trading activity seen through the market’s recent strong run through July.

“Until we have the market return to normal activity it is hard to gauge the strength of moves from July and the losses we have today,” he said.

The red ink was most prominent in the finance sector as all four big banks tumbled around 2 per cent with the threat of a royal commission looming large as politicians slam a decision to retain around half of the RBA’s cut.

Analysts were also concerned the decision not to pass on the full rate cut was a hint of sector weakness.

ANZ slipped 1.9 per cent at $25.23, Commonwealth Bank stumbled 2 per cent to $76.03, NAB skidded 2.8 per cent to $25.84 and Westpac weakened 2.5 per cent to $30.06.

The energy sector was a rare shining light despite crude prices falling again in offshore trade.

Santos rallied 1.7 per cent to $4.30 and Woodside ended flat at $26.44.

“The main bright spot is that the declines in the oil price looked to have slowed and the price of put options on both WTI and Brent continue to decrease, showing investors see less downside risk for oil at these levels,” IG market analyst Angus Nicholson said.

The big miners were mixed despite the price of iron ore pulling clear of the $US60 mark.

BHP Billiton dipped 0.78 per cent to $19.09, Rio Tinto inched up 0.02 per cent to $49.42 and Fortescue lost 0.23 per cent to $4.41.

The soft showing for the general market comes as earnings season kicks into gear, with Genworth Australia and Seven Group leaving a positive impression this morning.

Seven Group shares rallied 7.6 per cent as it topped guidance and Genworth jumped 6.9 per cent on news of a special dividend.

Elsewhere, Mark Bouris’ YBR saw its shares end flat after detailing a restructure and plans to tone down its acquisitive streak, debutant Viva Energy REIT surged 16.4 per cent and Mantra Group tumbled 6 per cent as Deutsche analysts warned on the hotels operator’s earnings quality.

Among blue chips, Telstra eased 0.52 per cent to $5.70 and Qantas fell 2.2 per cent to $3.14.

Meanwhile, the Australian dollar ended the local session around US75.9c, barely budging through the session.