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Highlights
- Australian shares drop due to disappointing bank results and anticipation of an interest rate cut.
- Bendigo and Adelaide (ASX:BEN) posts its worst performance ever, down 17%.
- A2 Milk (ASX:A2M) boosts consumer staples with strong results, up 17%.
Australian shares took a downturn on Monday, with banks leading the losses after underwhelming earnings reports from major financial institutions like Westpac (ASX:WBC) and Bendigo and Adelaide (ASX:BEN). Investors are also awaiting the Reserve Bank of Australia's upcoming meeting, where a rate cut is widely anticipated for the first time in five years.
The benchmark S&P/ASX 200 Index declined by 0.7%, or 60.9 points, after reaching a record high of 8555.8 points on Friday. Despite a positive performance in the previous week, the market experienced setbacks due to concerns about the banks' financial health.
Among the sectors, financials took the hardest hit, with Bendigo and Adelaide (ASX:BEN) plunging by a staggering 17%—its worst day ever—after reporting a drop in its net interest margin for the first half. Westpac (ASX:WBC) followed closely, falling 5.1% after revealing a 9% drop in its net profit for the first quarter, totaling $1.7 billion. Other major banks were not spared from the negative sentiment, with National Australia Bank (ASX:NAB) down by 1.6%, and ANZ (ASX:ANZ) down 1.4%.
In addition to banking struggles, insurers also faced pressure. The announcement from Opposition Leader Peter Dutton regarding a potential breakup of insurers as the federal election looms sent stocks like Insurance Australia Group (ASX:IAG) and QBE Insurance (ASX:QBE) lower, by 3.1% and 0.4%, respectively.
On the brighter side, consumer staples enjoyed a much-needed lift. A2 Milk (ASX:A2M) stood out with an impressive 17% increase in its stock price after the company upgraded its full-year revenue forecast and announced its first-ever dividend.
Additionally, Star Entertainment (ASX:SGR), which had been struggling with debt, saw a significant boost of 8.3% after Oaktree offered to refinance $650 million of its liabilities.
In other movements, Australia's largest steel producer, BlueScope (ASX:BSL), saw its stock rise by 7.8% despite a 59% drop in net profit after tax. Lendlease (ASX:LLC) faced a minor drop of 1.5% after reporting a swing to profit, while Aurizon (ASX:AZJ) fell 1.9% following a decrease in interim net profit. Meanwhile, Findi (ASX:FND) gained 5% after narrowing its earnings before tax guidance.
Overall, while some sectors, like consumer staples, showed resilience, the Australian market faced pressure from weaker banking results and market uncertainty.
