S&P/ASX 200 Index (ASX: XJO) bank shares are dragging the entire financial sector lower on Thursday.
The S&P/ASX 200 Banks Index (ASX: XBK) is down 2.1% today while the broader benchmark index is down 2%.
The sector's No. 1 share, Commonwealth Bank of Australia (ASX: CBA), is leading the pack lower, down 2.5% to $160.67.
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What's happening with ASX 200 bank shares?
ASX 200 bank shares are facing many headwinds today.
Morgan Stanley reckons there's a 5% earnings downgrade ahead, purely due to capital gains tax (CGT) changes in the Federal Budget, which may impact lending growth to property investors.
On top of that, there are macroeconomic challenges afoot, which tend not to bode well for bank stocks.
Consumer confidence is at a five-year low after three interest rates rises.
We've just seen the first signs of weakness in the jobs market, with unemployment rising to 4.5% last month.
And we're a long way off seeing the full long-tail impact of the global oil shock.
Amid this, the banks are trading on stretched valuations and falling trailing dividend yields.
You can compare ASX 200 bank share dividend yields with rising risk-free savings deposit rates beyond 5.5% for further data.
Portfolio manager Suhas Nayak from contrarian fund manager Allan Gray says ASX 200 bank shares look less attractive today.
Nayak told The Australian:
The total returns from here look not as appealing as many other parts of the market.
With all of this in mind, let's check out some new ratings on three of the five major ASX 200 bank shares.
Macquarie Group Ltd (ASX: MQG)
The Macquarie share price is $234.45, down 0.8% today and up 1.1% over the past month.
Morgan Stanley reiterated its buy rating on Macquarie shares with a 12-month price target of $263 this month.
This implies 12% upside ahead.
ANZ Group Holdings Ltd (ASX: ANZ)
The ANZ share price is $34.81, down 2.2% today and down 3.4% over the past month.
UBS recently upgraded ANZ shares to a hold rating with a $36.50 price target.
That implies 5% upside from here.
Westpac Banking Corp (ASX: WBC)
The Westpac share price is $35.77, down 1.7% today and down 7.4% over the past month.
Morgan Stanley reiterated its sell rating on Westpac shares last week.
The broker has a target of $34 for Westpac shares, suggesting a 5% fall from here.
