The benchmark S&P/ASX 200 closed down 16.8 points, or 0.4%, at 4591.2. It hit a four-week high of 4622.0 after Wall Street rose overnight, before falling to 4577.8 amid a lack of demand at the start of the Australian financial year.
The index remained above minor support at 4565.9, leaving the charts pointing to 4680.0, based on a double-bottom pattern, according to Dow Jones Newswires technical analysis.
"We still think the market will move into positive territory over the next few weeks given yesterday's strong close," said CityIndex chief market analyst Peter Esho.
On Wall Street, the S&P 500 rose 1.0% after the Greek parliament passed legislation implementing a crucial austerity plan, and ISM's Chicago business index beat expectations.
Also helping global sentiment, Germany's major banks agreed to join French institutions in rolling over a portion of Greek government debt.
The Australian market turned negative after China's manufacturing index missed expectations, although China's share market was slightly positive Friday afternoon.
Major banks fell 0.2%-1.0% after UBS cut its earnings per share forecasts to levels 6%-11% below consensus. UBS cut its recommendation on Commonwealth Bank stock to Neutral, while upgrading Westpac to Buy.
The broker said the banks' growth outlook remained subdued given deleveraging and the patchy Australian economy. It said banks must refocus on process re-engineering and cost savings.
Suncorp rose 0.3% to A$8.16 after reiterating its underlying insurance margin guidance of at least 12% growth. Australia's second biggest insurer of homes and cars said it will pay more for its reinsurance cover, after natural disasters this year, but its margin guidance indicated it may not be paying as much as some had feared.
Downer rose 1.6% to A$3.76 after hitting a five-day high of A$3.80 on news of the delivery of its first Waratah train to the New South Wales state government.
Apart from gains in BlueScope Steel, Seven West Media, Ten Network Holdings and Telstra, there was little evidence of investors buying stocks that have been beaten down by tax-loss selling before financial year-end.
Rare earths favorite Lynas Corp. dived 12% to A$1.75 after the Malaysian government imposed fresh conditions ahead of the start-up of its Lynas Advanced Materials Plant in Kuantan. Lynas said the conditions won't delay first production, but some analysts believe a hold-up is likely.
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