Australia's share market fell to its lowest in three weeks on Thursday, while its New Zealand counterpart retreated from yet another record high as investors turned defensive ahead of the long Easter weekend. Australian and New Zealand financial markets will be shut Friday and Monday and reopen on Tuesday. The S&P/ASX 200 index ended 1.1 percent, or 58.066 points lower at 5082.200, the lowest since March 3. New Zealand's benchmark S&P/NZX 50 index finished 0.095 percent or 6.320 points lower to finish the session at 6662.550.
Australia, banking stocks were a major drag on the index, led by a near 5 percent drop in Australia and New Zealand Banking Group shares. ANZ disappointed investors after it flagged bad debt charges of more than A$900 million ($674.28 million) for first-half 2016, A$100 million more than its previous guidance. The bank said this was due to its exposure to pockets of weakness associated with low commodity prices in the resources sector and in related industries.
The warning cast a shadow over the wider banking sector. Commonwealth Bank, Westpac Banking Corp WBC.AX and National Australia Bank NAB.AX all suffered losses of between 2 percent and 4 percent. Analysts said an interest rate cut by the Reserve Bank of New Zealand (RBNZ) earlier in the month and expectations of more policy easing have helped underpin appetite for stocks.
"When you bring down interest rates, the valuation of stocks goes up and I think that's what the Reserve Bank has managed to do," said Brad Gordon, investment adviser at Macquarie Equities. Among the gainers on Thursday, online auction company Trade Me put on 1.6 percent, while Fonterra's fund, which provides investor exposure to the farmer-owned dairy exporter, rose 0.2 percent.
Accounting software company Xero eased 0.5 percent and steel company Steel Tube lost 2.2 percent. In Australia, banking stocks were a major drag on the index, led by a near 6 percent drop in Australia and New Zealand Banking Group shares. ANZ disappointed investors after it flagged bad debt charges of more than A$900 million ($677 million) for first-half 2016, A$100 million more than its previous guidance.