Australian shares rise as banks blunt impact of Nextdc plunge

NEXTDC

Yesterday 06:51

Updates to close
Nextdc fell as much as 45%, worst day in nearly 9 years
Miners slip 1.2%, banks up 1%
RBA Deputy Governor says inflation looks "materially worse"
By Aamir Khalid
Oct 21 (Reuters) - Australian shares see-sawed between gains and losses to end higher on Wednesday, as a rally in banks helped offset declines in miners and data centre operator Nextdc, while investors digested a grim inflation warning from a top central banker.
The benchmark S&P/ASX 200 index .AXJO ended 0.2% higher at 8,831.30 points, after easing as much as 0.2% earlier in the day. The index ended down 0.3% on Tuesday.  
Nextdc NXT.AX dove more than 45% during the session, its steepest decline in nearly nine years, and shed almost half of its market capitalisation after the firm slashed its revenue forecasts for the year ahead and suspended future developments.
That dragged the tech index .AXIJ down as much as 6.1%, its steepest fall since mid-April.
     The collapse exposes an uncomfortable reality of the AI boom, said Hebe Chen, market analyst at Vantage Markets, adding that "strong demand means little for near-term earnings if infrastructure bottlenecks prevent that demand from translating into revenue." 
Miners .AXMM slipped 1.2%, with BHP BHP.AX extending losses after its quarterly copper output was lower-than-expected.
Banks .AXFJ were the outlier, rising 1%, with all the "Big Four" lenders in the green.
"The biggest reason for the move in the banks is their position as a safe haven for capital to rotate into given the uncertainty being caused by the Nextdc," said Luke Winchester, portfolio manager at Merewether Capital.
Sentiment was lacklustre after Reserve Bank of Australia Deputy Governor Andrew Hauser said tighter policy was working, but inflation still looked "materially worse," with high oil prices doing much of the damage. 
Nudged by the worrying outlook on inflation, markets pushed up the chance of a November rate rise to over 44%, from 30% at the start of the week, while a December move shifted up to a probability of 64%. 0#AUDIRPR
Elsewhere, energy stocks .AXEJ were up 0.5%, with shares of Santos STO.AX 0.5% higher, while Woodside WDS.AX gained 0.4%, after the firm trimmed the top end of its annual production forecast.
The New Zealand benchmark S&P/NZX 50 index .NZ50 rose 1% to 13,761.29 points.


 (Reporting by Aamir Sheik Khalid in Bengaluru; Editing by Mrigank Dhaniwala)
 ((Aamir.SheikKhalid@thomsonreuters.com;))
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