Why are the CBA and ANZ share prices down today?
Shares in the major banks have risen between 40% and 55% in the last 12 months.
Banking shares are among the most traded on the ASX boards on Wednesday. Commonwealth Bank (ASX: CBA) shares were down 0.6% to $99.57 at the time of writing, while ANZ (ASX: ANZ) lost 1.0% to $27.58. Rival Westpac (ASX: WBC) was also in the red at the time of writing.
What is weighing down sentiment in CBA and ANZ?
The weak sentiment is in part on account of worries about slowing economic growth, as GDP data is released for the June quarter. Australia’s economic expansion slowed to 0.7% in the 3 months to 30 June, figures on Wednesday showed.
The concerns follow extended lockdowns in Australia’s 2 biggest cities – Sydney and Melbourne – with roughly half the country’s population currently in lockdown following a spreading outbreak of the Delta variant of coronavirus.
Analysts and economists are worried the restrictions are having a significant negative impact on the economy, with consensus of a contraction in the September quarter.
But that impact is now set to widen with lockdowns set to extend well into the December quarter as states hold off reopening the economy amid high infection numbers.
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.
Slowdown in housing
Meanwhile, banks are also likely to see the impact of a clear slowdown in the housing market. CoreLogic data shows the national home value index rose 1.5% in August, its smallest rise since January.
While ongoing COVID-19 lockdowns have had an effect, the slowing rate of price growth probably is largely on account of worsening affordability constraints, with prices having risen almost 11 times faster than wages growth over the past year.
The lockdowns mean the major banks are also having to shoulder the burden of loan repayment deferrals and fee waivers. The Australian Banking Association, which represents the country’s biggest banks, has already rolled out support measures for businesses, sole traders and households affected by the recent spate of lockdowns.
Investors, worried about the impact of the uncertainty in the 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% and 55% over that period.
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