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Australia shares end lower on weak earnings forecasts

(Updates to close)

Aug 13 (Reuters) - Australian shares fell on Thursday, dragged down by losses in banks and utilities stocks, as a series of poor earnings forecasts fanned fears of more financial pain from the COVID-19 crisis.

The S&P/ASX 200 index fell 0.7% to 6,091.0 at the close of trade.

“The outlook from (the country’s) largest lender Commonwealth Bank has presented a rather realistic, and thereby negative, outlook in terms of the long-term effects of COVID-19,” said Nick Twidale, general manager at IC Markets.

Commonwealth Bank’s Chief Executive Matt Comyn said on Wednesday the bank expected lower credit growth and low interest rates to put pressure on its revenue.

The financial subindex lost over 1% on Thursday, with all of the “Big Four” banks falling between 1.3% and 2.6%.

The country’s top power producer, AGL Energy, and telecom giant Telstra Corp also forecast sharp drops in their earnings for fiscal 2021, sending their shares down 9.6% and 8.3%, respectively.

AGL’s weak outlook also weighed on the wider utility sector , which dropped about 4%.

Meanwhile, scandal-hit AMP Ltd ended over 10% higher after it said it would return about $400 million to investors in the form of a special dividend and a share buyback.

Industrial and healthcare stocks were also lower, with biotech behemoth CSL Ltd losing 1.4%, while toll road operator Transurban Group dropped 1.8% after two brokerages cut price targets for its stock.

Across the Tasman Sea, New Zealand’s benchmark S&P/NZX 50 index rose marginally to 11,500.82, helped by gains in real estate and consumer stocks.

Reporting by Soumyajit Saha in Bengaluru; Editing by Aditya Soni

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