Why Are Australian Banks Down Today?

All four of Australia’s Big Four banks are down today.

  • Commonwealth Bank of Australia [ASX:CBA] is down 1.62%, to $83.04;
  • Westpac Banking Corp [ASX:WBC] has fallen 2.04%, to $33.62;
  • ANZ Banking Group [ASX:ANZ] dipped 2.26%, to $30.85; and
  • National Bank of Australia [ASX:NAB] fell 1.37%, to $31.78.

What happened to the Aussie Banks?

Have you heard the saying, ‘If the US sneezes, the rest of the world catches a cold’? It’s an accurate statement explaining why Australian stocks sell off in line with subpar overnight trading in the US.

We don’t necessarily follow the US market exactly. But the confidence and views of US investors does have an effect on Australian investors.

And because of where we sit geographically, Aussies wake up to overnight news that affects their views on various stocks for that day.

Last night, US investors sold off financial stocks in large numbers. The S&P 500 banking index dropped 3.9%. It was the steepest slide since the Brexit-led turmoil in June last year.

Reported by the Australian Financial Review:

Major US banks, whose share prices have soared on hopes of massive tax cuts, looser regulations and a massive boost in infrastructure spending following Donald Trump’s electoral victory last November, suffered savage losses. Bank of America dropped 5.8 per cent, Morgan Stanley fell 4.3 per cent and Goldman Sachs finished 3.8 per cent lower.

What now?

Don’t let the overnight selloff in US scare you. The market is volatile. But so what? Volatility is want you want. It allows you to get into great stocks at cheap prices. And, if you’re planning to hold on to your investment for the long-term, short-term volatility should have little effect on your overall position.

Instead, try to find opportunities in volatility.

Regards,

Härje Ronngard,

Junior Analyst, Money Morning

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Harje Ronngard is a Junior Analyst at Markets and Money. With an academic background in finance and investments, Harje knows how simple, yet difficult investing can be. He has worked with a range of assets classes, from futures to equities. But he’s found his niche in equity valuation. It’s not good enough to be right on average when it comes to investing. The market is volatile and it only takes one bad day to ruin your portfolio. You don’t want to end up like the six foot man that drowned in the river that was five foot deep on average. It’s why Harje is constantly reminding investors of their downside risk here at Markets and Money. He does so by simply asking just two questions.  What is it worth? And how much does it cost? These two questions alone open up a world of investment opportunities which Harje shares with Markets and Money readers. Right now Harje is focused on managing research and investments over at the Legacy Portfolio. An investment publication designed to significantly grow investor’s wealth over time with deeply undervalued businesses. Harje also contributes his insights in Total Income, headed by income specialist Matt Hibbard. Harje loves cash-rich businesses, so he feels right at home amongst Matt’s high yielding income plays.


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