Shares crater as Westpac woes rattle market

Accusations of compliance failures at Westpac and a sliding oil price helped send the share market to its lowest level of the week.

The ASX 200 tumbled 88 points or 1.3 per cent to 6726 mid-session, unwinding yesterday’s 47-point gain and leaning towards the index’s heaviest loss since early October.

Banks accounted for much of the carnage after the financial intelligence agency Austrac accused Westpac of more than 23 million breaches of anti-money laundering and terrorism financing legislation. The government agency announced it had applied to the Federal Court for civil penalties against the bank after a detailed investigation. Among the accusations were that Westpac failed to carry out due diligence, failed to report billions of dollars of transactions and neglected to keep proper records. The bank said it would review the charges before making a statement. Shares fell 2.9 per cent  to a six-month low.

The increasingly aggressive stance by government regulators appeared to rattle the financial sector. ANZ dropped 1.6 per cent to its weakest level since early February. CBA fell 1.8 per cent and NAB 1.9 per cent. Fund manager Platinum Asset Management slid 3.6 per cent after warning shareholders it did not expect to receive income from investment performance fees unless markets saw a strong uptick.

The energy sector retreated further from last week’s five-month peak after oil closed at its lowest level this month. Beach Energy shed 2.7 per cent, Santos 1.4 per cent and Woodside 1.3 per cent. Brent crude pared overnight falls, bouncing six cents or 0.1 per cent to $US60.97 a barrel. Overnight, the international benchmark slumped 2.5 per cent.

Negative headlines on trade added to the gloom. The Wall Street Journal reported talks had failed to bridge significant gaps between Chinese demands for tariff relief and US insistence that China buy US farm produce. Overnight, US President Donald Trump warned he will raise tariffs if talks founder once more. S&P 500 index futures this morning declined eight points or 0.25 per cent.

The consumer discretionary sector bucked the market trend after the minutes from this month’s RBA meeting showed further rate cuts remain likely. Online travel agency Webjet rose 2.8 per cent after telling shareholders it expects full-year earnings before interest and tax to be 26-34 per cent higher than last financial year. Pokie manufacturer Aristocrat Leisure surged 6 per cent on news of a 23 per cent increase in full-year net profit after tax.

What’s hot today and what’s not:

Hot today: the animal spirits ran wild at the speculative end of the market as junior explorer MetalsTech spiked almost 800 per cent. Shares that have traded for months below 2 cents ran from 1.4 cents to 12.5 cents after the company unveiled plans to buy a gold project in Slovakia. The company said it was well funded to assess the historic Sturec mine, which has good infrastructure and an estimated ore reserve of 873,000 ounces. Shares lately traded at 9.6 cents, a gain of 586 per cent.

Not today: investors in Volpara Health Technologies have enjoyed a strong year as the New Zealand-based company’s breast cancer screening platform gained traction in the US. The share price has doubled from under $1 in February to a record $2.17 yesterday. Shares eased ten cents or 4.6 per cent this morning as investors did not find enough in today’s half-year report to justify further gains. The company said it was on track to meet its ‘midrange’ forecast for the full year.

Asian markets retreated. China’s Shanghai Composite gave up 0.2 per cent, Hong Kong’s Hang Seng 0.8 per cent and Japan’s Nikkei 0.7 per cent.

Turning to commodity markets, gold edged up 20 cents or less than 0.1 per cent at $US1,474.50 an ounce.

On currency markets, the dollar dipped almost a fifth of a cent to 68.14 US cents.