ASX drops for third straight session on disappointing earnings updates

The ASX’s weekly woes continued on Wednesday, as a big four bank and a major miner dragged the market heavily into the red.

Company results released on Wednesday as part of reporting season once again disappointed the market, with heavyweights NAB and Mineral Resources dragging the market down.

The benchmark ASX 200 index closed down 61.80 points or 0.73 per cent to 8419.20. The Index is now down 1.36 per cent for the past five days.

The broader All Ordinaries fell 57.60 points or 0.66 per cent to 8699.10 points.

Meanwhile, Australia’s dollar rose to 63.63 US cents, despite the Reserve Bank of Australia reducing the cash rate by 25 basis points on Tuesday.

The Aussie sharemarket dropped again on Wednesday following disappointing results out of a big four bank. Picture: NewsWire / Jeremy Piper

IG market analyst Tony Sycamore said the strong start from the reporting season appeared to be over.

“The halo from reporting season in its first week has seemed to come off as we have had some big misses from some of the more well known businesses,” Mr Sycamore said.

The sell-off was broadbased, with six of 11 industry sectors ending in the red, led by energy and financials which both fell by more than 2 per cent.

One of the major businesses was National Australia Bank, with shares falling 8.1 per cent to $36.30, although the bank was trading at a near record high prior to the announcement.

Mr Sycamore said part of the problem for the major banks was they were “priced for perfection” with any deviation in results likely to see a market sell-off.

The big four bank announced net profits of $1.70bn in profits, down 1 per cent for the quarter, on tighter margins and higher credit impairments.

Other big four banks also traded heavily in the red with Commonwealth Bank down 2.3 per cent to $158.94, while Westpac dropped 0.34 per cent to $32.20.

ANZ, which will report its half yearly results on Thursday, fell 1.57 per cent to $30.13.

The major banks have continued to trade lower after being priced for perfection. Picture Newswire/ Gaye Gerard.

The sector is down 4.8 per cent over five days with NAB’s disappointing earnings results following the likes of Westpac and Bendigo Bank which has also failed to impress the market during its updates.

Mineral Resources shares tumbled 20.7 per cent to $24.18 after it announced it lost more than $800m and it is axing dividend payments.

According to the company, revenue slumped 9 per cent to $2.29bn on the back of weaker iron ore and lithium prices for the six months until the end of December.

Gas producer Santos also slumped 4.5 per cent to $6.58 after posting a 10.7 per cent reduction in after tax profits to $US1.26bn for the 12 months ending December 31.

Wednesday’s winners were utilities, healthcare and telecommunication companies – including Seek, Telstra, Sonic Healthcare and REA Group.

Corporate Travel Management had the strongest day overall on the ASX with its shares surging 10.26 per cent to $16.54, on its half yearly results. The business said there was a 6 per cent decline in revenue to $342.8m, which was largely based on European operations being impacted one-off war-related write downs. The Rest of World segment excluding Europe grew 38 per cent on an EBITDA basis.

North American based slot machine and games manufacturer Lights and Wonders shares jumped 9.635 per cent to $168.52, after announcing a strategic acquisition of Charitable Gaming Assets.

Fletcher Building which grew 7.42 per cent to $3.04, after the building product supplier announced leadership changes, a strategic review and a cost reduction program, during its half yearly results.

Originally published as ASX drops for third straight session on disappointing earnings updates