Why are the CBA and ANZ share prices down today?
Shares in the major banks have risen 40-50% in the last 12 months.
Banking shares are among the biggest losers on the ASX boards on Monday. Commonwealth Bank (ASX: CBA) shares were down 1.4% to $96.85 at the time of writing, while ANZ (ASX: ANZ) lost 1.3% to $27.07. Rivals Westpac (ASX: WBC) and National Australia Bank (ASX: NAB) were each trading nearly 2% lower.
What is weighing down sentiment in the Big Four banks?
The impact is in part attributed to the slump in global markets on Friday based on worries about slowing economic growth. All 3 US indices ended lower with financial and energy stocks among the major losers.
Those concerns have extended into the local market, with Australia's 2 biggest cities Sydney and Melbourne, and roughly half its population currently in lockdown following a spreading outbreak of the Delta variant of coronavirus.
Analysts and economists are worried the restrictions will have a negative impact on consumer sentiment and undo some of the solid economic recovery so far seen in Australia.
Even before restrictions in Sydney were tightened over the weekend, economists were expecting at least a 0.5% hit to the national GDP. But that impact is now set to widen with all non-essential retail as well as all construction projects forced to down shutters.
The banking sector, which has a major exposure to large and small businesses, and also the biggest weightage on the main ASX indices, will see a direct impact on its fortunes from the developments.
Banks extending support
Over the weekend, the Australian Banking Association, which represents the country's biggest banks, rolled out support measures for businesses, sole traders and households, including loan repayment deferrals and fee waivers. It has already announced a support package nationally for individuals and small businesses who have been affected by the recent spate of lockdowns.
Separately, Commonwealth Bank announced it will extend a moratorium on any foreclosures if customers are unable to meet their home loan repayments, while Westpac has offered interest free temporary overdrafts to existing small business customers if their revenue has been significantly reduced.
The moves come just weeks after the 4 big banks announced a rebound in profits after reversing nearly $1 billion in bad debt provisions due to Australia's better than expected economic recovery.
Investors, worried about the impact of the uncertainty on the booming housing market, to which the Big Four banks have the largest exposure, are responding by booking some of the profits from the recent run up in bank shares.
Banks have been among the best performing stocks on the ASX over the last 12 months, with their values rising between 40-50% over that period.
Considering buying CBA or ANZ shares?
If you are keen to buy shares in any of the Big Four banks, you should consider investing through an online share trading platform.
Not all platforms offer the same list of stocks. Some trading platforms offer US stocks only, so make sure to select a platform that offers ASX-listed stocks.
Choose from the dozens available for Australian investors. Compare the features and fees from the plethora of trading platforms available for Australian investors.
Looking for a low-cost online broker to invest in the stock market? Compare share trading platforms to start investing in stocks and ETFs.