October 31, 2019 / 6:45 AM / 4 months ago

Banks, led by ANZ, pull Australian shares lower

(Updates to close)

By Nikhil Nainan

Oct 31 (Reuters) - A profit miss from Australia’s fourth-largest lender pulled its peers and the country’s benchmark index lower on Thursday, despite gains in markets across the rest of Asia after the U.S. Federal Reserve cut interest rates.

Australia and New Zealand Banking Group reported a near 3% drop in its second-half cash profit amid record low interest rates and tough competition for home loans.

ANZ shares reacted with a 3.3% fall, with the other Big Four banks all in the red, declining between 1.1% and 1.3%.

Australia’s benchmark S&P/ASX 200 index ended 0.4% lower, hurt by the slide in financials - the largest component of the benchmark. The index lost 26 points to 6,663.4, and is down for the month, despite gaining for much of it.

ANZ kicked off the reporting season for the big banks, with National Australia Bank and Westpac Banking Corp expected to report next week, and the country’s top lender Commonwealth Bank of Australia, the week after.

Macquarie Group was flat ahead of its results on Friday. The investment bank is scaling back its cash equities businesses outside the Asia Pacific region, and is expected to cut 100 jobs in London and New York.

Markets elsewhere in Asia jumped after the Fed cut rates as expected. However, the central bank also culled expectations of further reductions unless the economy takes a turn for the worse.

Qantas Airways dropped 2.6% after it discovered cracks on one of its planes.

Local media reported that Australia’s aviation engineering union has called on Qantas to ground its entire Boeing 737 fleet.

Energy stocks were also weaker, with Beach Energy among the biggest losers, dropping 2.6%. Oil prices rose in Asian trade but dropped overnight on supply concerns.

Elsewhere, the gold sector was the only major gainer, with St Barbara advancing 3%.

Morgan Stanley, in a note earlier this week, said it favours Australia as a defensive play amid a flurry of global risks keeping investors largely risk-averse.

In New Zealand, the benchmark S&P/NZX 50 index was little changed, closing at 10,787.82. (Reporting by Nikhil Kurian Nainan in Bengaluru, Editing by Sherry Jacob-Phillips)

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