The big four S&P/ASX 200 Index (ASX: XJO) bank shares all rebounded from early-day losses to finish in positive territory yesterday.
And the Aussie banks are surging higher again on Wednesday.
Here's how they're tracking in late-morning trade:
- Commonwealth Bank of Australia (ASX: CBA) shares are up 0.8%
- Australia and New Zealand Banking Group Ltd (ASX: ANZ) are up 0.5%
- National Australia Bank Ltd (ASX: NAB) shares are up 0.4%
- Westpac Banking Corp (ASX: WBC) shares are up 0.5%
As for Tuesday's trade, the performance of the ASX 200 bank shares was almost a mirror opposite of what we saw with the ASX 200 mining stocks.
CBA shares were down 1% in early trade yesterday before surging 1.3% to finish the day up 0.2%.
ANZ also started the day in the red before its share price leapt 1.2% to close up 0.4%.
It was a similar story for NAB and Westpac shares, which soared 1.4% and 1.5%, respectively, from intraday losses to both finish the day up 0.4%.
The big Aussie miners went the other way.
Yesterday, BHP Group Ltd (ASX: BHP) shares went from positive territory in morning trade to close down 2.5%. Fortescue Ltd (ASX: FMG) shares dropped from the green to finish down 5.3%. And Rio Tinto Ltd (ASX: RIO) also lost ground to end the day down 0.2%.
All three of the ASX 200 miners are again in the red today.
Here's what's happening.
ASX 200 bank shares reverse 'the great rotation'
The sharp uplift enjoyed by the ASX 200 bank shares follows China's disappointingly limited new stimulus measures announced yesterday during intraday trading hours.
This looks to have led to a reversal of the so-called 'great rotation' out of bank stocks and into ASX miners like BHP and Rio Tinto. This rotation kicked off in late September following news of outsized new Chinese stimulus measures to boost the nation's sluggish growth.
That news led to a big boost in the flagging iron ore price, which in turn saw retail and institutional investors decrease their holdings of ASX 200 bank shares like CBA and ANZ to free up money to invest in mining stocks.
Traders had expected China to announce another round of significant stimulus measures on Tuesday, which saw the iron ore price hit US$114 per tonne in the morning.
But China's National Development and Reform Commission (NDRC) meeting failed to detail any additional major stimulus measures. Though the government did promise to speed up spending programs, tapping into the 2025 budget to spend 100 billion yuan (AU$21 billion) on local government investment programs this year.
Commenting on the tepid stimulus announcement, Alicia Garcia-Herrero, chief Asia-Pacific economist at Natixis in Hong Kong, said (quoted by The Australian Financial Review), "They created expectations of a much bigger stimulus, so everybody was disappointed."
She added:
Even worse, they talked about front-loading from 2025, so no new money. Basically, they have created a bubble, but they are not ready to feed it further with fiscal stimulus, and bubbles need that. Words are not enough.
Following that news, the iron ore price is today trading for US$105 per tonne, down almost 8% in 24 hours.
While that's creating headwinds for the big Aussie miners, it's been a boon to stockholders of ASX 200 bank shares.
