ASX edges lower, even as investors pump $18b into banks

The Australian sharemarket was unable to extend its 11-week high on Wednesday, despite a strong bid for the major banks by institutional investors who alone brought $18.2 billion to the local bourse.

The S&P/ASX 200 Index fell 5.1 points, or 0.1 per cent, to 5775. The big banks, though, headed in the other direction as they all reached their highest levels in more than two months.

Despite a positive lead from Wall Street prior to the open, local shares fell by more than 1 per cent through the morning, with investors selling off after two strong trading sessions.

The early loss was recouped before midday however, with strong buying pressure on the major banks offsetting heavy losses from the major mining stocks.

Momentum was lost later in the session however, with stocks dipping as protesters in Hong Kong clashed with police over Beijing's new hardline approach on security.

Large institutional investors have been snapping up the banks in the last few days after being underweight for the past few months, reducing their exposures in resources and healthcare in order to fund the trade.

"At the start of the month, you saw really big selling from the retail investors with dividends being cut," said Hugh Dive, Atlas Funds Management chief investment officer.

"With the JobKeeper payment being a lot lower than expected, the economic fallout is not as grim as people expected and some institutions have been buying back the banks."

Commonwealth Bank rose 4.9 per cent to $64.30, Westpac advanced 8 per cent to $17.61, NAB firmed 7.8 per cent to $17.94 and ANZ climbed 8.6 per cent to $17.94.

Macquarie Group closed 2.1 per cent higher at $110.95, Bank of Queensland firmed 7.5 per cent to $5.43, Bendigo & Adelaide Bank added 5.7 per cent to $6.29 and Virgin Money UK rose 15.5 per cent to $1.83.

The major miners kept the market anchored through the session, however, offsetting financial sector gains.

BHP Group dropped 2.9 per cent to $34.46, Rio Tinto slid 2.4 per cent to $91.52 and Fortescue Metals Group lost 5.1 per cent to $13.08.

CSL also weighed heavily, falling 6.4 per cent to $288.00 - its lowest level in more than two months. The healthcare sector was broadly weaker, with Cochlear dropping 2.8 per cent to $187.93 and ResMed declining 3.6 per cent to $24.14.

More modest losses from a number of other blue chip stocks also took their toll. Telstra fell 1.9 per cent to $3.17, Transurban dipped 2.7 per cent to $14.34 and Woolworths dropped 1.8 per cent to $34.72

Gold miners were also hit hard as investors sold out of the safe haven sector.

Saracen Mineral Holdings slid 11.2 per cent to $5.00, Northern Star Resources fell 10.9 per cent to $13.46, Evolution Mining dipped 8.5 per cent to $5.61, Gold Road Resources declined 9.1 per cent to $1.64 and St Barbara lost 7.8 per cent to close at $2.95.

Silver Lake Resources dropped 8.3 per cent to $2.11, Newcrest Mining slipped 7.2 per cent to $29.56, Regis Resources declined 5.2 per cent to $5.07 and Resolute Mining dipped 6.6 per cent to $1.05.

Afterpay gave up some of its gains after rising for five consecutive sessions ahead of its inclusion in the MSCI Australia Index on Friday. It fell 7.9 per cent to $45.25 but is still almost 50 per cent higher for the year to date.

A strong rally in the price of oil continued to support the local energy sector, as OPEC+ led cuts help balance a market facing increasing demand as global travel restrictions ease.

Woodside Petroleum advanced 1.3 per cent to $23.55, Santos climbed 2.9 per cent to $5.62, Beach Energy added 2.4 per cent to $1.70, Origin Energy firmed 1.4 per cent to $5.83 and Cooper Energy rose 5.9 per cent to 45¢.

Building material stocks also enjoyed a strong bid as construction work data from the first quarter showed the sector was performing ahead of expectations.

The pace of falls in private-sector residential construction showed signs of slowing, while private-sector non-residential construction rose, showing construction activity was not as badly affected by COVID-19 restrictions in March as some had feared.

James Hardie Industries rose 2.7per cent to $26.40, Boral added 7.3 per cent to $3.10, Adbri firmed 6.2 per cent to $2.77 and CSR closed 7.7 per cent higher at $4.05.