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Banks weigh on Aust stocks

Australian shares have tracked lower throughout Monday as weakness in the major banks undercut any gains from surprisingly strong company profits data.

The benchmark S&P/ASX200 ended the day down 0.57 per cent at 5,754.9 points, with the big four banks and Macquarie Group all down heavily as doubts about strength in the housing market and ongoing uncertainty around the impending federal banks levy weighed on the sector.

Upbeat company profits data lifted the Australian dollar, however, with the local currency jumping to its highest level in a week after Australian Bureau of Statistics numbers showed gross operating profits grew six per cent in the March quarter and 39.7 per cent over the year.

The Aussie hit an intra-day high of 74.65 US cents , up from 74.36 US cents just prior to the release of the data at 1130 AEST, as economists speculated the better-than-expected result could be a positive for the national GDP figures, due out on Wednesday.

CMC chief market analyst Ric Spooner said while the economic data was a positive it was unlikely to shift equities unless the numbers varied widely from expectation.

Instead Monday's weakness in the banks was a continuation of recent investor negativity in the sector with the impact of the banks levy still unclear and slowing in Australia's housing sector posing another risk over the sustainability of bank profits, he said.

"I think everything to do with housing is going to be important for the market and for the economy," Mr Spooner said.

"One of the key issues is going to be: are we going to just have a soft landing from a high base."

The Reserve Bank of Australia meets on Tuesday to consider the official interest rate, with economists expecting no move from the current record low of 1.5 per cent.

However ABS housing finance figures, due on Friday, will be a key focus for traders and hold further implications for sentiment towards bank stocks.

Macquarie Bank dipped two per cent to $88.20, while the big four banks retreated by between 1.3 and 1.8 per cent.

Across the market, mining stocks fell while energy stocks were slightly higher, with Origin Energy adding eight cents to $7.77 but Woodside Petroleum down 11 cents and Santos flat.

The rise in the energy sector came as oil futures rose on reports Saudi Arabia, the United Arab Emirates, Egypt, and Bahrain had cut diplomatic ties with liquefied natural gas exporter Qatar, accusing it of supporting extremism and undermining regional stability.

ON THE ASX AT 1630 AEST:

* The benchmark S&P/ASX200 was down 33.2 points, or 0.57 per cent, at 5,754.9 points.

* The broader All Ordinaries index was down 29 points, or 0.5 per cent, at 5,792.1 points.

* The June SPI200 futures contract was down 24 points or 0.41 per cent, at 5,763 points.

* National turnover was 2 billion securities traded worth $6.3 billion.

CURRENCY UPDATE:

One Australian dollar buys:

* 74.67 US cents, from 73.90 US cents on Friday

* 82.55 Japanese yen, from 82.47 yen

* 66.30 euro cents, from 65.88 cents

* 58.02 British pence, from 57.46 pence

* 104.78 New Zealand cents, from 104.44 NZ cents

GOLD:

The spot price of gold in Sydney at 1700 AEST was $US1,279.69 per fine ounce, up from $US1,260.60 on Friday.

BOND SNAPSHOT AT 1630 AEST:

* CGS 4.50 per cent April 2020, 1.6622pct, from 1.6594pct

* CGS 4.75pct April 2027, 2.3955pct, from 2.4135pct

Sydney Futures Exchange prices:

* June 2017 10-year bond futures contract at 97.58 (implying a yield of 2.42pct), from 97.56 (implying a yield of 2.44pct) on Friday

* June 2017 3-year bond futures contract at 98.3 (1.7pct), from 98.29 (1.71pct).

(*Currency closes taken at 1700 AEST previous local session, bond market closes taken at 1630 AEST previous local session)

Published on: Monday, June 05, 2017

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