Global Markets | Australian shares fall for third day as banks weigh ahead of federal budget

Australia's equity benchmark fell for a third straight session on Tuesday, with banks leading losses, as investors braced for a federal budget promising spending restraint and selective reform.

The S&P/ASX 200 closed 0.4% lower ‌at 8,670.70, sliding ⁠2.4% over ⁠the last three sessions. Australia is set to deliver a lower-than-projected budget deficit later in the day, buoyed by commodity windfalls, as it edges sensitive reforms forward without fanning inflation. Last week, the Reserve Bank of Australia was forced into a third rate hike this year as stubborn core inflation refused to ease.

The budget offers little immediate upside for rate-sensitive sectors, with tighter fiscal ⁠settings likely ‌to prolong pressure, while leaving infrastructure, healthcare and resources relatively unscathed, said Heath Moss, portfolio manager at HLM Investments.


Broader risk appetite remained fragile ⁠as oil prices edged higher on fading hopes for a deal to reopen shipping lanes through the Strait of Hormuz.

In Sydney, financials slid 1.6% to a six-week low, with investors awaiting top lender CBA's results on Wednesday as a barometer for the sector's outlook.

The bank's smaller peers ANZ beat forecasts, while National Australia Bank and Westpac fell short.

These so-called Big Four banks fell between 1.4% and 2.1% on Tuesday. Healthcare ‌sank 1.7% in a sixth straight session, with heavyweight CSL sliding 2.2% to extend Monday's rout. Buck-ing the trend, miners advanced 2.5% to their highest level in nearly ⁠10 weeks, as iron ore traded flat after a six-day rally and copper prices firmed. Mining majors BHP and Rio Tinto rose 2.5% and 3.1% to record peaks. In company news, counter-drone tech firm DroneShield plunged 9.9%, its lowest in over two months, after disclosing a regulatory probe into its November share trading and disclosures. It dragged industrials down 1.2%.

New Zealand's benchmark S&P/NZX 50 index fell 1% to 13,080.33 points, logging its worst session in over three weeks.