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CBA drags Australian stocks lower

By Mensholong Lepcha

04:55, 17 November 2021

Australian securities stock exchange in Sydney
Australian securities stock exchange in Sydney – Photo: Alamy

Australian stocks extended losses on Wednesday as the country’s biggest lender Commonwealth Bank of Australia (CBA) emerged as the biggest drag following its poor earnings announcement.

Benchmark S&P/ASX 200 index fell 1% to 7,348.20 by Wednesday afternoon and was on track for its biggest intraday loss in three weeks. The index closed 0.7% lower on Tuesday.

Shares in Australia’s largest publicly listed company, CBA, fell over 8% by late afternoon to hit a near four-month low of AUD98.75. The lender flagged weakness in its quarterly net interest margins due to home loan price competition and ultra-low interest rate environment.

Interest rate hike not expected in 2022

Reserve Bank of Australia Governor Philip Lowe said an interest rate hike in 2022 was unlikely, a day earlier.

CBA’s disappointing results dragged the S&P/ASX 200 Financials index 3% lower by Wednesday afternoon.

DE40

16,008.40 Price
+0.310% 1D Chg, %
Long position overnight fee -0.0221%
Short position overnight fee -0.0001%
Overnight fee time 22:00 (UTC)
Spread 2.0

HK50

17,096.50 Price
-1.880% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0044%
Overnight fee time 22:00 (UTC)
Spread 5.0

US100

16,029.10 Price
+0.460% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 1.8

US30

35,432.20 Price
+0.260% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 2.2

Australia and New Zealand Banking fell 2.3% to AUD27.77, Westpac Banking slipped 1.8% to AUD22.35 and National Australia Bank lost 1.6% to AUD28.78.

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Japan and HK down

Elsewhere, Japan’s Nikkei 225 index and Hong Kong’s Hang Seng index fell about 0.4% each by Wednesday afternoon.

Food, steel, pharmaceutical and retail trade sectors fell over 1% each in Japan, while bank and real estate stocks emerged as top drags in Hong Kong.

Gaming firm NetEase dropped 3.7% to HKD176.4 in Hong Kong on Wednesday, despite reporting a year-on-year rise in quarterly revenue and profit. The company is set to spin-off its music streaming unit Cloud Village in Hong Kong.

Read more: RBA governor dismisses 2022 rate hike speculation

Markets in this article

AU200
Australia 200
7040.3 USD
49.8 +0.710%
AU200
Australia 200
7040.3 USD
49.8 +0.710%
AU200
Australia 200
7040.3 USD
49.8 +0.710%
AU200
Australia 200
7040.3 USD
49.8 +0.710%
AU200
Australia 200
7040.3 USD
49.8 +0.710%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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