ASX 200 bank shares are falling on news of a fresh round of stimulus measures to be rolled out in China.
According to The Australian, the S&P/ASX 200 Index (ASX: XJO) initially rose by 0.3% to an intraday high of 8,172.7 points after the news was released.
However, apparent profit-taking among ASX 200 bank shares investors amid a switch to the miners has dragged the benchmark index into negative territory.
The ASX 200 index is now down 0.36% to 8,123.7 points.
The weight of the major ASX 200 bank shares within the index, following skyrocketing share prices this year, is likely amplifying the impact of their sell-down on the broader market.
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ASX 200 bank shares down amid China stimulus news
Here's what is happening with the major ASX 200 bank shares today:
- The National Australia Bank Ltd (ASX: NAB) share price is $38.73, down 2.44%
- The Westpac Banking Corp (ASX: WBC) share price is $32.84, down 2.29%
- The Commonwealth Bank of Australia (ASX: CBA) share price is $139.50, down 2.03%
- The ANZ Group Holdings Ltd (ASX: ANZ) share price is $31.18, down 1.64%
- The Macquarie Group Ltd (ASX: MQG) share price is $228.88, down 0.94%
What has China announced?
The People's Bank of China announced the stimulus measures in Beijing today.
According to Reuters, the measures include a 0.2% cut to the seven-day repo rate and a 0.5% cut to rates on existing mortgages.
The central bank will also lower banks' reserve ratio requirements by 50 basis points.
The stimulus measures are designed to help China meet its target of 5% economic growth in 2024.
Gary Ng, senior economist at Natixis, said:
The move probably comes a bit too late, but it is better late than never.
With an elevated real interest rate, poor sentiment and no rebound in the property market, China needs a lower-rate environment to boost confidence.
Capital Economics head of China economics, Julian Evans-Pritchard, said the new stimulus package signalled "a greater sense of urgency around supporting the economy" than previous measures.
Evans-Pritchard commented:
In a departure from their previous approach of drip-feeding piecemeal support measures, China's financial regulators have just announced a coordinated package of stimulus measures.
This is a step in the right direction, but insufficient to drive a turnaround in growth unless followed up with greater fiscal support.
Banks fall while ASX mining shares rise
Stimulus in China typically leads to greater industrial activity, which means more demand for iron ore.
Indeed, the major ASX iron ore shares are benefitting most from today's stimulus news out of China.
At the time of writing:
- The Rio Tinto Ltd (ASX: RIO) share price is $115.81, up 3.09%
- The BHP Group Ltd (ASX: BHP) share price is $40.87, up 2.66%
- The Fortescue Ltd (ASX: FMG) share price is $17.95, up 1.47%
The S&P/ASX 200 Materials Index (ASX: XMJ) is leading the market sectors on Tuesday, up 1.71%.
